Streamlining sales tax laws sound like a good idea to you?  Most Illinois businesses would readily agree.  Illinois' sales tax is one of the most complex in the country--sorely in need of reform.  And while we're at it, shouldn't internet sellers and catalog sellers have to collect sales tax the same way our local Illinois businesses do?  Why do they get a competitive edge?  Our members want to "level the playing field" between brick-and-mortar stores who have to charge sales tax and cyber stores that don't.  The same concerns have been expressed by brick-and-mortar stores in every state in the country.  The states-- always desperate for tax revenues--also want sales tax charged on internet sales.  

In response to the growing frustration of brick-and-mortar retail stores and with the full support of states looking to increase tax revenues the Streamlined Sales Tax Project was born.  The Streamlined Sales Tax Project (or "SSTP") is an effort by a group of states to streamline or simplify sales tax laws across the country so that it is easier for catalog and internet retailers to collect sales taxes.  It is their hope that if enough of the states join together they can demand federal legislation that forces all catalog and internet retailers to pay sales tax whether or not they have nexus in a particular state.  The states seek to override the U.S. Supreme Court decision in "Quill," --case law which currently provides that states can't require a catalog or internet retailer to collect sales tax unless they have a physical presence in their state.  [While Illinois brick-and-mortar stores would be happy to see Quill go away, Illinois based companies that sell by catalog or over the internet won't be too pleased--it means that they would have to collect sales taxes for any state in which they have a customer--even if they don't have a physical presence in those states.  It's a two-edged sword.]  

While "leveling the playing field" and simplifying the Illinois sales tax sound like laudable goals, there's really a lot more involved.  The Illinois Chamber's Tax Institute has reviewed the national SSTP model language and raised some serious technical and substantive issues that will arise if the antiquated Illinois sales tax law is made to conform.  

If Illinois adopts SSTP:

• Our legislature will lose the right to define terms in our Illinois sales tax.  SSTP requires participating states to adopt the same product definitions used by other states.  SSTP definitions are different for such items as computer software, food and drugs, many service transactions, and all lease transactions.  Changing these definitions will have a direct revenue impact on taxpayers and consumers. 
  

• The State of Illinois will no longer be able to amend any of the adopted definitions to include or exclude specific items if doing so would be inconsistent with the national definitions.  Matters of interpretation will be resolved by the national SSTP governing board--not the State of Illinois. 
  

• It will fundamentally change how Illinois taxes services.  Under SSTP, taxpayers that report service occupation tax will have to disclose to their customers their actual cost of goods sold or charge sales tax on the full amount billed to the customer--a back door tax on services.