Nov 20 2013

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State Sales Tax Law Sameness is “Main Street Fairness”??? (Part 2)


This article is part 2 in a series of articles about “Main Street Fairness” internet sales tax legislation. To read the first article, click the title: “The Tax-Man’s Tangled Web – Exposing the ‘Main Street Fairness’ Act”.

Part one of this series was an overview regarding information discovered in researching issues related to a Michigan two bill legislative package dubbed “Main Street Fairness”, H.B. 4202 and H.B. 4203. Behind the two bill legislative package approved by the House Tax Policy Committee in September, is a policy that has resulted in changes to state tax laws across the country, beginning in 2000.

The more than decade-long policy has occurred through advocacy and funding of interested parties which include big box retailers, lobbying organizations, and some state government bureaucrats and officials.

This article details some important history to which Michigan’s H.B. 4202 and H.B. 4203 are directly tied and begins to examine problems with the overall policy.

Taxpayer in a red tape tangle

Taxpayers, especially small business owners, are tangled in a red-tape strangle of tax codes and compliance burdens. “Main Street Fairness” and the overall policies driving it have added and will add to that burden.

That two bill “fairness” package is only one such round of state legislation. “Fairness packages” are simply the most recent. Bills with that name and identical or very similar language have been introduced at some point in the last several years in many states across the country with varying outcomes 1.

“Main Street Fairness” legislation is really just the name chosen for a carefully planned and well-funded marketing campaign to support one phase in a series of attempts to make sweeping changes to state tax codes. While the “Main Street Fairness” campaign is now nearly four years old, the overall policies and agenda have been more than a dozen years in the making. The “fairness” push, then, is just one step of many.

Under the management of the National Conference of State Legislatures (NCSL) 2, 32 states began working on an agreement officially known as the Streamlined Sales Tax Project (SSTP) in 2000.

Snapshot of cover page of the Streamlined Sales and Use Tax Agreement as of May 2012 - click to view SSUTA

Click to view the Streamlined Sales and Use Tax Agreement document history and to read SSUTA in full

Ultimately, the Streamlined Sales Tax Project laid out parameters for compliance with a formalized agreement – essentially an interstate compact - called the Streamlined Sales and Use Tax Agreement (SSUTA). The agreement was crafted to go into effect when 10 states proved their compliance, which occurred in 2005. The 10 state baseline triggered the dissolution of the Streamlined Sales Tax Project when the SSUTA went into effect, although National Conference of State Legislatures (NCSL) reports that its ‘Task Force on State and Local Taxation’,  “…continues to serve in an oversight capacity of the streamlined sales tax process and…”.

I’m going to have to ask readers’ patience regarding what comes after that “and”. Also, I’m temporarily deferring other questions about the NCSL and “oversight” statement to maintain focus on the subject of the SSUTA.

The Streamline Sales and Use Tax Agreement (SSUTA) was designed – in part – to…

  • Craft provisions requiring remote retailers to collect sales taxes on purchases in ways that stood the best chance of getting around a 1992 Supreme Court ruling (Quill) and its reaffirmation of long-standing legal doctrine prohibiting states’ regulation of interstate commerce (see this section of Part 1 for a brief refresher)
  • To knock down arguments that tax collection and reporting in so many tax jurisdictions is a burden (and therefore a barrier to interstate commerce and companies’ compliance), by getting states to make their tax laws the same.

Since 2005, a total of 24 states – Michigan is one of them 3  – have changed tax laws and are in “full compliance” with SSUTA. Two states have been deemed “in substantial compliance” with the SSUTA and are considered “associate members” 4.

Considering the concept of “50 state laboratories”, this move towards uniformity and sameness within states is disturbing on its face.


To understand some of the problems a push for uniformity can cause, take a look at an annual certification of compliance required of each member state (see one submitted in September 2013 for Nebraska). The certification is pages of check boxes regarding particularities of state law.

The biggest problem with “compliance” is that state lawmakers’ ability to change state sales tax laws and even tax code generally is significantly limited. A summary of what states are required to do – direct quotations from the current version of the SSUTA:

  • “State level administration of sales and use tax collection.”
  • “Uniformity in the state and local tax bases.”
  • “Uniformity of major tax base definitions.”
  • “Central, electronic registration system for all member states.”
  • “Simplification of state and local tax rates.”
  • “Uniform sourcing rules for all taxable transactions.”
  • “Simplified administration of exemptions.”
  • “Simplified tax returns.”
  • “Simplification of tax remittances.”
  • “Protection of consumer privacy.”

SSUTA further centralizes power and policy at the state level of government and turns significant powers over to an entity outside of the state. Within some states, administration of tax laws and/or determination of the tax base is (or was) handled at the local level. SSUTA demands one policy, meaning, in states which have adopted SSUTA, local control has been diminished.


NFIB Optimism Index, Most Important Problems Chart

Among the small businesses surveyed, the burden of government regulation and taxation are the top two problems. We can only wonder how many small business owners are aware that one source their problems is found in the SSUTA. (Click image of table to visit National Federation of Independent Business’ “Optimism Index” page for more survey results)

An analysis by the New Mexico Tax Research Institute c.2003 detailed the many issues confronting state policymakers considering adoption of SSUTA. While informative regarding impact on government, that analysis, like so many others, fails to note the burden imposed on businesses within SSUTA states.

A 2005 tax law professor’s analysis laid out major issues for business owners, and makes clear that many SSUTA requirements impact portions of state tax code which have nothing to do with selling across state lines, affecting all businesses within a state 5. 

In overlooking the overall impact on businesses, SSUTA advocates ignore another important fact. The stagnant nature of the economy since the “meltdown” of 2008 across the country makes the timing of the SSUTA particularly bad. Major, rolling changes to states’ tax laws beginning ~2004 in many states added another layer of uncertainty and costs – for businesses. 


While gearing up to argue for “Main Street Fairness” and the need to “level the playing field” for local businesses, SSUTA and “Main Street Fairness” pushers were supporting changes to state laws which affected local businesses in a negative way, by adding to their compliance burdens.

Engaging in the effort to comply with SSUTA and its “child” policy, “Main Street Fairness”, seems like a lot of work and expense to undertake in an effort to go after potential revenue, so, it seems only sensible to wonder: Are there are additional goals the SSUTA and “fairness” efforts are meant to achieve? If so, what are they?

Information in Part 3 of this series may provide readers with some answers, as I reveal more about what the Streamlined Sales and Use Tax Agreement created and continue to examine the fallout from it.



“Red tape tax man” created by Shelli Dawdy. Michigan readers should note that a few of the taxes strangling the poor fellow may be unfamiliar, such as the wheel tax, because the image was originally created and used for an article on the Grassroots in Nebraska website. Permission to use image granted if unedited and unaltered, attribution and link required.

The other two images are snapshots of from the SSUTA agreement and a NFIB report and both are linked to the pages which they came.



  1. “Fairness” legislation introduced in various states has met with mixed results; some have passed and others haven’t moved much, if at all, since their introduction. Of measures passed, the majority have been the object of legal challenges, including the North Carolina and Colorado measures mentioned in the first article. Litigation regarding Colorado’s measure is still active – as are numerous others – and at least part of North Carolina’s was overturned. This series will further explore both the legal challenges and economic impact of such legislation which did pass and went into effect for some period.
  2. The fact that the National Conference of State Legislators acted as manager for the Streamlined Sales Tax Project, was reported by a lobbying grouping, the Performance Marketing Association, and is confirmed by NCSL’s own version of events on the subject, found on a dedicated “task force” page.
  3. According to notations in Michigan Compiled Laws, adoption of some portions of Streamlined Sales and Use Tax Agreement provisions occurred in 2004.
  4. According to very recent information published on the SSUTA Governing Board’s website, the state of Ohio, currently listed as an “associate” member, has applied for full membership to the SSUTA
  5. It should be noted that the 2005 SSUTA analysis includes ultimate recommendations I cannot endorse, which are best summarized as: “make lemonade out of SSUTA’s lemons” by participating voluntarily. Such recommendations would be helpful to SSUTA’s advocates, not to businesses.

Permanent link to this article: http://grassrootsmichigan.com/?p=3680

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