State & Local Tax Blog

NY May Get the Boot from the SSTP

The SSTP has a committee that evaluates whether a state remains in compliance with the SSTP agreement. So what happens if one or more states fall out of compliance? And it’s easy to imagine that states will adopt various provisions from time to time that will move it in and out of compliance with the SSTP. What a mess this creates. Apparently NJ is the first state to cross that line. The CRIC (Compliane Review and Interpretations Committee) was all over it according to a report we read in CCH. Apparently, New Jersey is not in substantial compliance with the Agreement because of its failure to enact certain telecommunication provisions.
So what happens to a state that goes AWOL?

The Board imposes sanctions.

If New Jersey does not come into compliance by January 1, 2009, on that date it will lose its right to vote on amendments to and interpretations of the Agreement and determinations of whether a petitioning state is in compliance.
I don’t know how much of a sanction that is. But that only gives them 6 months from now to get these “certain telecommunication provisions” enacted.  The bigger sanction happens one year from now.
If NJ still is not in compliance on July 1, 2009, sellers will be relieved on that date of the obligation to collect sales and use taxes on sales into New Jersey, if they are collecting on a voluntary basis solely because of their registration under the Agreement.
This sanction could hurt. So if you are one of the companies collecting in NJ just because of the SSTP registration, you may be off the hook a year from now, we’ll see.
I wouldn’t think the NJ legislators will react kindly to the admonishment given them by the SSTP Governing Board President (who is Joan Wagnon of the Kansas Secretary of Revenue). Who said this is “an opportunity for the New Jersey Legislature to rise to the occasion” and get those telecom provisions enacted.
But maybe this will scare them: NJ May Get Expelled!
The Board says if the state’s noncompliance continues after January 1, 2010, the Board will consider additional sanctions, which could include expulsion. 

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