Hosts & Guests

Meredith Smith, Senior Tax Manager, SALT

Judy Vorndran, Lead Partner, SALT

Craig Johnson, Executive Director, Streamlined Sales Tax Governing Board


Streamlined Sales Tax Governing Board with Craig Johnson

[00:00:00] Meredith Smith: Welcome to SALTovation. The SALTovation show is a podcast series featuring the leading voices in SALT, where we talk about the issues and strategies to help you make sense of state and local tax. Today, we're going to share with you our conversation with Craig Johnson, the executive director of the Streamlined Sales Tax Governing Board.

We talk with Craig about the accomplishments at Streamlined since 1999 and cooperation among both participating and non-participating states.

Well, Craig, thank you so much for joining us today. It's a pleasure having you.

[00:00:37] Craig Johnson: Yeah, thank you for having me. I really appreciate the opportunity to get the word out about Streamlined and talk a little bit about what we've been doing.

[00:00:44] Meredith Smith: Right. So on that note, can you just kind of give us just the high level, what is Streamlined in a kind of elevator pitch?

[00:00:51] Craig Johnson: Sure, sure. So when you think about Streamlined, I tell people thinking. Ways to make things easier and simpler for sellers, not just remote sellers. So many people have been focusing on remote sellers, Streamlined, focuses on all sellers, whether you're in state businesses, brick and mortar businesses or remote sellers.

Um, our organization was put together as a, as a partnership, really with the business community and the state tax administrators, the state legislators, and trying to find ways to address the undue burden. That businesses face that resulted in Quill and the national Bellis has decision saying, Hey, unless they have a physical presence, you can't require them to collect our tax.

So we recognized there was a, there were some issues and some burdens that were placed on businesses, they were going to be required to collect tax and we needed to address those. And so that was what Streamlined was originally originally set up for. And that was what our goal was, was to work with the business community, understand what those concerns are and then find solutions.

And then ultimately resulted in the development of the Streamlined sales and use tax agreement.

[00:01:55] Judy Vorndran: Did they happen like way back when? I mean, I really served, so when I pivoted into this career, 26 years ago, I thought maybe I'm making a mistake going to sales tax because the Streamlined, and then here I am 26 years later and I still have a career cause it's still not as easy as I wish it was.

Right. I mean, that was really the whole,

[00:02:13] Craig Johnson: right. It really, you know, really started when you look, I mean 99 and 2000 as one Streamlined, really kicked off. And it was really with the national governors association, national conference of state legislatures and working with the tax administrators saying, Hey, we've got to do something about this.

We got to make things easier. And, you know, at one time and when Streamlined first started, people referred to it as a, you know, they want it to get to the zero burden sales tax so that there was absolutely no burden. And, you know, we obviously haven't gotten to zero burden. Um, but we have made, at least in our member states, we've made significant improvements and significant strides and making it easier for businesses.

[00:02:49] Meredith Smith: Well, and over that kind of 20 over. Your existence. What are some of those major accomplishments of streaming?

[00:02:58] Craig Johnson: Well, when you think about the accomplishments, the Streamlined, you know, I kind of think about them in two categories, kind of the broad ones, and then the more call it micro or narrow or focused accomplishments.

And when you start talking about the broad accomplishments as well, which is where I'd like to start, I guess, would be our role with, with respect to the, uh, to overturning the quail and the national Bellis has decisions and our role in the South Dakota. And, you know, when, what states we're seeing, and this is, you know, pre Wayfair, we didn't know when this was going to happen, but we're seeing, you know, all this growth in e-commerce, we're seeing brick and mortar stores that are facing and unlevel playing field.

And they're trying to compete with remote sellers. We had to find a solution to put together a way to efficiently and effectively calculate, collect, and remit the sales and use taxes. Or quite frankly, the sales tax was not going to continue to be. I will revenue source for the states states. We're seeing with that growth in e-commerce, they were seeing their sales tax revenues flattened.

They received their sales tax revenues. In some cases, especially at the local jurisdiction levels, they were seeing them decline. And our states, when they got together with the business community was kind of the, if you build it, they will. If you can figure out a way to make it easy for sellers to calculate, collect remix your tax, they're going to voluntarily come forward and do it.

And of course there were the naysayers. People say, nah, it's never going to happen. People are never going to voluntarily collect and things like that. But by the time the Wayfair decision came about Streamlined had developed the Streamlined sales and use tax. We had 23 full members states that had enacted all of those simplification and uniformity provisions.

We had an associate member, state, Tennessee who had done some of the things, but not, not all of them to achieve full, uh, full membership. And at that point in time, again, we already had about 3000 sellers that had voluntarily come forward and there, they were agreeing to collect all the member states. So it was a, if you can build it, they will come.

Our partnership with the business community was really the key to getting that first accomplishment, which was the completion of the agreement itself. Multi-state businesses. They know, and they knew where the pain points were. They knew the challenges that they were facing, you know, states and, you know, and I'll put myself, myself in this category because I worked for the Wisconsin department of revenue for 20 plus years before I came to, to Streamlined, you know, we didn't really have, I don't believe.

A true appreciation for all the various nuances multi-state businesses faced. We knew our laws inside and out. I knew our laws inside out quite frankly, expected multi-state businesses to know just as well, but while we're focusing just on our laws, multi-state businesses, they're trying to do this. And they're focusing on every state's laws that they're operating in.

And, and I think. Again, as part of our accomplishment, we now as states have a much better understanding and appreciation really for what multi-state businesses face and, uh, the, the challenges that they have at the same time. I think the reverse is true. These multi-state businesses also now have an understanding kind of what the state tax administrators were facing and the challenges that they were facing.

Uh, I don't think there were any tax administrators who were necessarily. Hey, our law is perfect. Our law is really simple, but they were willing to sit down at the table with the businesses, really listen to what they say, wipe the slate clean and say, well, let's figure out if we start over, what would we do to make this as easy and simple and uniform as possible so that we can, again, remove those undue burdens, get the, uh, get the Quill decision.

Get the national palace has decision. Overruled. So when, when Wayfair did finally come up with. You know, we're 10 years into Streamlined already Streamlined became effective October. First of all, five. And now we're talking 2016. When the Wayfair decision or Wayfair case first started in South Dakota, we had 10 years of experience in implementing the Streamlined sales and use tax.

And I still think. And when you go back and if you read and reread the opinion of the Supreme court and their references to what South Dakota had done in removing the undue burden, or that in their words, appeared to be designed to remove the undue burdens on interstate commerce, they pointed to their membership and Streamlined.

They specifically listed out a number of the requirements that are contained in Streamlined. So I think from, from a global perspective, that's probably. One of the most, if not the most and the most important accomplishment that Streamlined the Streamlineds accomplished. Now we've done other things as well.

I mean, our, our central registration system is something that we developed back in 2005. We let sellers kind of be able to come in and register. Uh, we had, uh, you know, it was somewhat of an archaic system, but, but at the time it was a way to make it, make it easier for selling or for registered. To register.

So when you look at, at the sellers before Streamlined, before that central registration system was adopted and enacted, a seller had to go into every state system, fill out a separate application, try to figure out, okay, what are, what does this state want for me to register? And then even after they did it, how do they know that they're, you know, that they're actually registered in.

So. Well, we wanted and really what we needed. We need to make it easy for sellers to be able to register in all the states in one central location. And we wanted this to apply not only to those out-of-state businesses that are making sales into the member states. But even our own in-state businesses, we wanted any seller to be able to use it.

Um, and, and from my perspective, when we updated our registration system in 20 15, 20 16, you know, my team and I, along with, uh, our members, states really asked the question, what information does a state really need? To be able to register a seller and we wanted to require a, you know, and this might sound terrible, but we want it to require as little information as possible.

I agree.

[00:09:11] Judy Vorndran: They asked so much, I mean, I, I joke about Pennsylvania, one of your first born child. I mean, it's nine pages long. How do you even know that business? Oh, is it 18? It's crazy. How many questions? And then you got a tire tax and then whatever in Ohio you're like, shoot me now. I don't, I don't know why you're asking all this.

Right. You're like, it's, it's onerous. It really is for the unknown. And there's a lot of that going on right now. A lot of people don't get, why are they asking this question? Do I need to answer? It's a government. Of course I should answer it. And it's like, you're kind of asking and answering things that may not be relevant to your.

So it is very challenging, I think, for the unwitting to go forward and do these registration document.

[00:09:50] Craig Johnson: Yeah. And from our perspective and the way we have it set up, you know, if, if our member states want or they need more information, then the onus is on them to reach out to the seller and say, we would like this additional information.

It's not a matter of the seller having to weave their way through every state's application. And, you know, we knew that the registration system was important, but what really stuck out to me, um, we had a former state tax administrator had been very involved in Streamlined. Left Streamlined, went to work for a private law firm.

And when he went to work for them, they handle sales tax for their clients. And what he did is he, he contacted me after he'd been, been gone for probably a couple years and he kind of gave me the story about one of their clients. They had to register them in just about every state with a sales tax. So Streamlined states and non Streamlined states.

And he said they went through the process. You know, they knew for the non Streamlined states are gonna have to go to each state's registered. System. So they did that, you know, they would start on one state and they think they have everything. They moved to the next state and then they'd find all that state wants something different.

So then they go back and do that. So over the course of time, they get registered in all those, all the non-member state. She said, then we went to the Streamlined system and we registered for the remaining 24 states. And they said, is this, as it turned out, this particular client needed to register in every one of our states.

And they said it was almost as though what's the catch. 'cause we, we filled out one application. We put in our name, we put it in the fin number. We put in the address to contact. Yeah, that's what they put in. And then we went down and we checked the boxes for all the states. We wanted to register it. Now this, because this business hadn't operated was basically new legal entity.

They had to register in their law, but if they had been registered in even a few of the states, there's a spot. All they do is check a box and say, Hey, we're already registered in that. So our states don't set up duplicate registrations because we obviously don't want to cause that either. But he said then the other thing was after they registered in the non-member states and, and Judy, I'm sure you probably run into this.

You register a business and you sit and wait, how long do you have to wait before you actually get notification from the state that you're registered? And if you're already starting to collect sales tax in that state, you're wondering, okay. My collecting before I even have a permit yeah. I've sent the application.

So with our system, you click the submit button and you immediately are given your SST ID. It applies for all 24 of our member states or all the states that you selected to be registered in and they will then follow up with their own information, but all of our states recognize it. Once you've submitted your Streamlined registration, you are registered in that state.

You are free to operate. And I'm sure, I mean, smaller businesses in particular, probably one of the last things they think about as they're starting their businesses sales tax court. Yeah. And all of a sudden they're ready to go. And then they go, oh, you need to register for sales tax. And someone would say, well, you can't start selling in that state until you get your registration.

Well, how long does that take? So we were able to get that to them immediately. And I think that that is a, that is a huge benefit. And, you know, There've been people that said, well, yeah, but you can't use it if you're not in a Streamlined state and said, no, you can use if you're not in a Streamlined state, but you're going to make sales into any one of our member states, you can still register through Streamlined.

So there's some of those misconceptions that are out there too, that we know we really want to get people beyond. You know, for example, Judy, your folks sitting in Colorado saying, well, Maybe great, but we can't do anything. Cause we're in Colorado for all the transactions outside of Colorado, you can certainly take advantage of Streamlined if it's, if there are any one of our members states.

So we obviously, um,

[00:13:37] Judy Vorndran: distraction is what you're saying is for all those other states and then do the separate ones. Cause I, I think for me, you know, you've been involved as an organization, a long time. You've been in state care a long time. Why aren't the other 22 states playing ball? Right? We've got 46, 46.

Of course I'm counting DC as a state, even though we know. Why are they still at, of course, as I look at it, my clients, and I'm always weighing mostly it's cause a lot of software companies are pushing, Streamlined as a way to lower your cost of compliance and also the software cause their CSP provider, I think they're CSPs.

And so I'm always like, okay, well push pull of that is you lose some control because of. And they're, they're the vendor of record and you are not. So there's some challenges there and then you have to follow the rules and you can't hire anybody in the states. You can't have traditional nexus. So it inhibits business operations, but that's not really what you're doing.

Right. You're saying this is this portal you can get in these states. But then if I look at the population of the U S the only largely populated state in the system is New Jersey. The rest of the states, the big states, Florida. California, Texas New York, Colorado, of course. Cause we're crazy. Um, with our home roles, our participant they're participated, but they're not, they still haven't gotten on board 20 years later.


[00:14:51] Craig Johnson: they don't like. Okay. Well, you know, that that's a good point, Meredith. I mean, one of the things that I do is I do track the, obviously the revenues that our member states it's self-reported by them to me. So you, I have to rely on their information and I can tell you, our states are seeing significant.

Uh, significant revenue from sellers registered through Streamlined, but you know, as far as why other states aren't participating, you know, I mean, different states obviously have different reasons, but when I think back to Streamlined and when it started, you know, Think about the challenge of trying to get one state, to make a particular change in how they handle an issue and not multiply.


[00:15:31] Judy Vorndran: remember Ronnie was a huge issue,

[00:15:34] Craig Johnson: routing skill, and interestingly enough, routing still is an issue for some of these states, which not our member states, but your multiplier. Challenged by 23 or 24, if you include Tennessee in there. And, you know, we were at least successful in finding solutions that we could get 23 states now to fully enact and to move forward with.

And, you know, the thing is. The simplifications of the uniformity. It required every member state to make changes. Some of them were significant. You know, some people move from origin based sourcing to destination. That's a huge change. When you look at Washington, state's a prime example of that. They still have some, I think, some Streamlined payments that are made from the state to the, some of the municipalities because of joining streamlining, going from origin to destination.

But, but that's, that's huge, you know, other states have. I'm going to say less changes that they needed to make to, to participate. Now, no state that you know, that I'm aware of at least was doing everything perfect. Nobody was able to say, I'm joining Streamlined. I don't have to change a thing. No, that didn't happen.

Everybody had to make some changes and you know, I think. Right now. I mean, our members states they don't want to put sellers in any type of a gotcha type position. They want to make things simpler. They want to make things easier. I don't think any of our current states look back and say, oh, I wish we would never have joined Streamlined.

You know, the states are continuing to do that. They're maintaining their compliance. Uh, we continue to review legislation that states are proposing just for the purposes of. Is it in compliance with Streamlined. Um, the states are very concerned about that. They want to make sure they want to do everything they can.

And I think that's, I mean, that's great because that really shows the businesses operating in those states that those states do want to make things uniform. They do want to make things, make things easier.

[00:17:28] Judy Vorndran: We went to destination in Colorado of Wayfair way back in 2018, even though we'd always done location and common reporting for Dustin, you know, for it's not origination, but.

Sizing for our statutory cities and counties in Colorado. So we took that big leap to say, well, we're going to destination, which people kind of freaked out about, but that was to get in conformity with Streamlined as well to say, we have a uniform system based on destination, you know, kind of putting the seeds in place.

Cause you know, now we're going towards the home rule being loo registered at the state, which Arizona did a course quite a few years ago. That has made a lot of those cities, a lot of money because it's all in one place. Just get the rates and then you can tax. It's not, of course as easy as I'm saying, but it is easier.

And I know Arizona has just reaped a huge benefit financially from streamlining. So hopefully we'll see that same benefit in Colorado, then I'll move forward. But that's still back to the question. So you think that's why California Colorado can. I understand because of our constitution, our home rules, we can't, you know, we can agree to certain things that are going to jeopardize that, that.

Problematic within our state law legal system. But what about the other states, Texas?

[00:18:39] Craig Johnson: Well, so I think some of them, you get into the, the uniform state, local tax base requirement. I mean, there's number of states that, Hey, they tax something at the local level, but they're not taxing it at the state level or vice versa.

And I just, I can't get past the fact that how do you expect businesses? To be able to do this in multiple states, you know, pre, pre Wayfair before any state could require them to collect tax. It was easy. We just aren't going to collect the tax, but now they want them to collect the tax. I, I think that they're going to, you know, they're going to need to create that uniformity.

Uh, you mentioned the rounding rule and to me, that's a simple matter. You rounded out, you go three decimal points at anything that's 0.5 and up you round up anything that's point below 0.5 year round down. That seems simple. Right? You can, you can program that, but interestingly enough, some states there's a huge fiscal impact.

I mean, I saw fiscal impacts between 10 and $30 million for

[00:19:34] Judy Vorndran: rounding.

[00:19:36] Craig Johnson: Um, you know, and then you get into the uniform definitions and states states want to do things. Different ways. And many times, quite frankly, it's the business community saying, Hey, look, we want a specific exemption for this. Or we want an exemption for that.

Well, Streamlined develop the uniform definitions, you know, in conjunction with the business community and saying, okay, how do we define this? We want clear, bright line, you know, definitely. And, you know, you think about something like, like candy. That was something that took a long time for, for Streamlined to be fine.

But before Streamlined, every state had their own definition of candy, I think back to Wisconsin, it was like a, a sweetened preparation of something, something, you know, and it made it sound. You could fit honey glazed ham into candy, obviously that you didn't want to do that. I mean that wasn't, but now by having a uniform definition, if you're a multi-state seller, multi-state retail, it sells candy.

You know, that's what what's candy in Wisconsin is also candy in any one of the other members states. Right now, what we aren't doing is we don't tell the states, you all have to tax for exempting. We just say everything is candy. So then when a sellers programing, this, they can say, okay, candy, this is candy.

This product falls within candy. This state taxes, candy, the state exemption, you can turn those tax flags on or off. That makes it, I'm going to say much, much simpler for the sellers. So, so the definitions are definitely part of it. And then state sovereignty, you know, states want to be able to do. What they want to be able to do.

And we are trying very hard to, you know, walk that fine line of where does simplification or where does simplification and state sovereignty. Where's the ideal spot for them to meet every time you make things simpler and more uniform and require more uniformity. You're theoretically taking away from.

From state sovereignty, but if the businesses that are operating and again, without applying to both your brick and mortar sellers and your remote sellers equally, it's making it easier for all of them. And I think that the business community is certainly appreciated, you know, where we've had that, that uniformity and, and we've been able to.

Where states needed something special. We, you know, we've created some toggles conjunction with the business community because quite frankly, some of the business community says, Hey, no, we prefer, you know, even though the state maybe wants to tax and I'll use the, one of the latest amendments to the agreement, we amended the definition of candy so that a state can exclude.

Dried fruit that is sweetened. Normally that would be candy. In this case, it was, it was Wisconsin and the Wisconsin cranberry growers association. And they came to us and they said, look, you know, we want to be able to exempt cranberries that are dried and sweet, the Craisins and. We don't want to have to lose all the revenue from the camp.

We worked with some state legislators. We worked with the tax administrators in Wisconsin. We worked with the cranberry growers association, got the business community together and developed a definition. So we created a toggle. So a state can exclude those things, but they still have to at least be transparent and indicate that now on their taxability, maybe.

[00:23:00] Judy Vorndran: So like, that's just so funny to me because when I think about sales tax, which I think so many people don't pay attention to, if you go to the grocery store, we know food for home consumption is typically exempt in a lot of states under the WIC standard or whatever, but you're like, well, what's food for home consumption.

Craisins versus potato chips, right. Candy versus you're eating at home, but is it really a little

[00:23:20] Meredith Smith: pot of like deli thing versus. Pint of soup. Like what are you going to eat right now versus can you eat, consume it in one sitting

[00:23:30] Judy Vorndran: invoice, it's all lined out. You might've bought pens and pencils for your kid's school or folders.

You don't know, the tax is collected on what to do from the bottom. So it's interesting that they would lobby it for it because I don't know that the buyer even goes and says, oh, that was taxed or not. When they buy their Craisins, because it would be a one-off purchase where they really notice it and it's not material.

So I think it's interesting. They will lobby for that. But it also

[00:23:55] Meredith Smith: could be a marketing thing, right? Like here you is put some Craisins on your salad. It's, you know, it's fruit or whatever, but then it's like, oh, well, no, it's not as candy. I don't know if the dried banana, you know, coalition is, you know, put driving in, even though driving is, have a lot of sugar in it, but you know, like it could also be a marketing ploy.

Like, I don't know, we do taxes who knows like what that backend rationale

[00:24:16] Judy Vorndran: is. Yeah. I just think it's interesting how the industry's push these things forward, which is how we have all these complicated laws. And there's one industry for good reason saying, well, don't treat me less candy. I don't want to get labeled as such.

And I don't want to get taxed as such, but no, none of the buyers probably even know. Right. The, I don't even know I'm going to buy Craisins cause I like them and because they're sweet and I like.

[00:24:40] Craig Johnson: Right. Yeah, no. And, and from my perspective that, you know, in the seat that I sit in, I look at it and I, I tell myself, okay, what we want to create this toggle.

If that's, what, if that's what the industry and the business community wants to do, states are states are willing to do it because it does give them additional flexibility. My concern is making sure that it is so clear and so transparent so that a state can say, this is what we do with it. And, uh, and the business community can look at and go, okay, we understand.

Um, Wisconsin exempts this and Minnesota taxes and they can indicate that on their matrix if we can't get to, uh, you know, if it takes interpretation to figure that out then, to me, we haven't, we haven't done our job. It's Streamlined. We need to make it clear.

[00:25:26] Judy Vorndran: Well, you know, it's funny. I had a client years ago, convenience store, right?

They're selling energy drinks at this time. This is like 15 years, 10 years ago. How many energy drinks do you think there are? Like when I went to law school as mountain Dew, I won't lie to drink coffee. So I drink a lot of mountain Dew, my caffeinated beverage of choice. I don't really drink it anymore, but I loved it and it got me through.

Uh, you know, at that point there must have been thousands of energy drinks, monster, this monster, that, and the distinction of Colorado for whether or not this drink was a tax law or not. Was the labeling on the back? Does it a nutritional label or a supplement label? Well, we went to the grocery store and found two cans.

Different labels, same product. How are you supposed to set the skew up for that in your POS system? So there is some problems with some of that, not your fault, but just was a taxpayer trying to enforce. They're like, I just want to say that monster, whatever is taxable, but I don't know how they're going to label it, the manufacturer.

So that was a funny little issue we had with the state of Colorado. And I thought, you know, you're putting a lot of onus on a vendor and you're exempting. If it has the right light. Organize milk or coffee in it. And some of these energy drinks do so. Anyway, some of that I thought was just, and that's really driven by industry, right?

What they're doing and how they're framing themselves. And they probably liked the marketing level of nutritional versus supplement label as well. If it's nutritional, it's perceived differently than a supplement, but who knows.

[00:26:52] Meredith Smith: But you also have to take into account, like in that instance, in like food, like what is the FDA gonna allow? So it's not just isolated to like, what is, what is the preferential treatment from a manufacturing perspective, but like, what is the FDA requiring? Are you putting gin Singh in it, which is a herb, which is a supplement versus just caffeine.

I'm making this up. I have no idea with the FDA, but like, you know, there's. You know, I just want to stay awake while I'm driving from Colorado to Indiana, but there's so many layers in order that have to happen in order to keep me awake.

[00:27:28] Judy Vorndran: Yeah. We do work with like a CBD company, some CBD companies and a cannabinoid, which is a non THC supplement, but sometimes the labeling.

Interesting because it's a newer product, you know? And so what is the right thing to put on here in terms of how you label it to, for your consumers? So it was a really interesting issue because supplements aren't taxable in some states and they are and others. And so you're like, okay, well, how do I decide that?

And it's not prescriptive. Right? You can just buy it over the counter. You don't need a doctor's note for. So anyway, so those things I think get really layered and it's good to, like you said, to have transparency and a similar definition, and I wish we were closer to 46, right then the 24. It is good.

We've got a place for people to start. I do think a lot of places, if they're going to have questions. They're having issues. They can go to Streamlined and go. We should adopt this. If we're going to make any adoptions at all, because we know it'll create more clear.

[00:28:19] Craig Johnson: Yeah. And we do see that we do see where states, when they're opening up their laws and they're looking at amendments that they will look at Streamlined and I will get calls from them.

There'll be not member states and saying, you know, you did this. Any, any suggestions? Good, bad. Are you thinking about making any changes to it? You know, things like that and we'll have those conversations. And I, and I think that that's. That's an important piece of Streamlined that even though it's, you know, again, 24 states, the other 22 states are looking at it and they are adopting, adopting provision.

So that's important.

[00:28:50] Judy Vorndran: And it would work. I mean, I would just say after all this time, it's, it's proven itself out. It's working. We I'd like to see greater adoption in the larger state. Especially because they do represent some, I mean, California just I'm from California. I mean, I know that 30 fricking million people there, so they do represent 10% of the us population.

So there may be a little arrogant on that or a little confused, I don't know. Sure.

[00:29:11] Craig Johnson: Yeah. That's what we, you know, we, we recently put in a, an adopted, a resolution that would allow non-member states to participate with us. I don't know if you're familiar with that or not, but we'd so, so. And we're in the same spot.

First of all, Wayfair happens and Wayfair did not address the undue burden issue. Right? It just said this, you can have substantial nexus without having physical presence. That was really it, that remanded back to South Dakota. They said, You guys, you know, it's remanded back to determine whether or not there's still any undue burden on interstate commerce.

It gets settled and, you know, and that's where, where it is. So that question still remains. That is a question that I think, you know, whether it's one of our member states or a non-member state, they're likely going to see a challenge on that at some point in time. Of an undue burden, what constitutes an undue burden.

And so what we're trying to do, and what we decided to do is work together with the business community again and say, all right, what can we do with non-member states? Because we recognize for some states right now, the reality is it's a difficult political lift. It's too heavy of a political lift to try to get them to join Streamlined as full member states.

But we've got some pieces. I mean our own members, states businesses in our own member states that are selling into some of these non-members states. They're being expected to collect those taxes. And yet there's no simplification, no uniformity. So what can we do? And what can we ask those other states to do that?

Isn't it doesn't go all the way of joining Streamlined, but it takes advantage of some of the things that we have developed and approved, like participating in our central registration. Requiring them to put together a rate and jurisdiction database. So at least a seller can put that in their system and say, okay, if it's this address, here's the state and local jurisdictions.

If I don't have it, you know, I can go down to the five digit zip, you know, that whole process open up the CSP. And let the CSPs and compensate the CSPs for providing the same services in those non members states that they provide in our, in our member states. And we want them to participate with us because we believe that if we get all the states operating together, And working under one contract with the CSPs, it's going to make it easier for the CSPs, obviously to, okay.

We got the same contract in all the states. It's going to make it easier for the states to say, Hey look, we're as a group, we can get this all done at, at one time, um, with the CSP. So we, we want them to participate with us, you know, in the, uh, uh, in the CSP contract, we want them to provide the liability, right.

That is huge for remote sellers in particular. I mean, you're in, you're in Colorado and you're shipping products to me in Wisconsin. Do you really know the Wisconsin laws and what's taxable and what's exempt. And now some people will say, well, I'll just collect tax on everything that I don't have to worry.

Oh, you go ahead and do that. And you'll see yourself right now. Right? Whether it's key time or a class action, you're going to see you probably see a lawsuit. So the CSPs, I mean, their systems are set up so they can do this in all the states. Um, but it's not, it's not cheap either. And if we can have the states helping those businesses and compensating for it, to me, I think that's a.

Big issue of, or a big way to help reduce and remove the undue burdens by offering those CSP services. And we got

[00:32:37] Judy Vorndran: rid of that in Colorado. So now we're limiting you to like a grand as your vendor fee. I mean, I mean, there are companies remitting, millions of dollars to state of Colorado under getting a grant for doing it.

You gotta be kidding me, right? The software. I mean, people pay a quarter million dollars. Software to collect sales tax in AmCraiga, depending on the type of business. Not, not everybody spends that much, of course, but I mean, the real costs of compliance are large. So the S the vendor fee and all that really doesn't compensate for the effort involved so that I agree with you.

We should man, choose to have more of that. Give back a little for the given, right? Like Alabama's done. Because they gave a percentage of, for people voluntary to collect it. And I would also say, even though the 24 states may not represent all of the population in the U S it does easy administration. And so you are going to care about South Dakota when you might not have bothered before.

You're like, why, why not add it in? I'll just, I'm setting up a system on a bill based on ship. Do done taxes collected. Here you go. South Dakota. What's one more return, right? I mean, I feel like at 11 return. You got some time in that just collect it's like the incremental cost to go all the way is not that much more than the Lusher.

[00:33:47] Craig Johnson: Yup. Yup. Yeah. You know, and, and if you have a CSP, that's doing that for you on top of it. Judah you guys probably, you probably work with some of the CSPs with some of your clients. And to me, that's a, that's a great partnership because you, you get a better understanding of what the CSP systems do and what your client's systems do and okay.

Which ones are going to integrate well. And which ones may not be as, as good as far as from an integration perspective. So it's, I think

[00:34:15] Judy Vorndran: that's also interesting the CSP, because you do give up some element of control and the guaranteed. It's really not that as what people think, because in the end you got to create the tax decisions.

You've got to map things properly. That's on you. So that's incorrect, even though they're remitting. If you're wrong, you're wrong, know this, you're still liable for that. The CSP does not protect you from that liability. And the other challenge with that is you're limited. You can't hire anybody in the state.

You can't put inventory in a state capital location, a state, so you can't have a physical presence. Those things really depend distinctly on the business operations. And of course now with COVID. People have become very agnostic about hiring. So that is I think, problematic. So I've had some clients that have done CSB or SST, and then they end the CSP and then shoot, but they hired somebody in the state.

And of course at this point, What are you gonna do about that? Pull out? Like, I don't even know what the states would do if they find if they're no longer compliant, you know, it could apply they've already in. Right. So I don't even know if the state's really thought of that when, uh, when a business changes its operations.

Cause that is, see, I've seen a huge shift in that. And people hiring would drive all this believe with, with wifi, right? You could work anywhere in certain professions, but we've been all is like, Nope, you come in the office, you gotta see each other. You gotta FaceTime. And that is hugely changing our world today.

And we're hiring people all over the world. I mean, I have clients that have people in Canada that worked for them, like, who cares if the talent is there, we're going to hire. So that's going to change the footprint of some of that. So I think hopefully we'll get that figured out so that people don't have to pull out of the program because they hired somebody into CSB

[00:35:47] Meredith Smith: state.

I think that goes back to kind of like the central theme of what we've been talking about is, you know, gee, I don't, you know, you can disagree with me on this, but like, I don't find that our clients, you know, some of them just don't like texts all together, but most of them are generally. I understand that this is a cost of doing business and they understand that this is what I need to do.

I'm okay with doing it. Don't make it so damn hard. And so, and that's almost across the board with any tax type you've got sales tax, and then you've got, you know, what, if you're a pastor entity as a small business, you know, you get a sales tax license, you generally need to file an income tax returns.

You've got non-resident shareholder withholding. That's almost impossible to administer and like keep track of, and figure out what to do. So it's just like, If we can just make this easier. People will comply and it goes back to, you know, Craig, what you said, like if you build it, they will come. If you make it, if you make it easy, people will

[00:36:40] Craig Johnson: comply.

Right. Well, and it's interesting. So we, we surveyed every one of our sellers that are registered. We did this about, probably about six to nine months ago. So we've had a lot of registers because we're adding two to 300 new sellers every month. Right. And we have been since, since Wayfair, so we're, we're continuing to grow.

So we're going to be serving more of those newer sellers again, but these, some of these sellers were the ones that first signed up with the program back in 2005, 2006, and they've still been in the program and we wanted to find out, you know, what do you think of the registration system? Are you using a CSP?

Okay. What do you think is a good or bad? What about the work that Streamlined has done? What else can we do? Probably the number one comment we got was get the rest of the states. Don't necessarily change what you're doing, but get the rest of the states get greater buy-in. And I think that there are probably hundreds of thousands of businesses that probably are not in compliance today.

[00:37:44] Judy Vorndran: Hundreds darling, I think more like, so when, when do you remember where the MTC did that? What was it? An amnesty program for a bunch of states to get registered and all that good stuff. And it was like right after, before, wait after, before,

[00:37:57] Craig Johnson: primarily for the FPA, right? FBA sellers.

[00:38:04] Judy Vorndran: Correct. So, but they said they got like under a thousand participants, which was phenomenal. And, but at that time I understand that there were over 2 million, million FBA sellers. Okay. That has got to tell you, there are millions of companies in non-compliance and you just don't know about them cause they haven't registered and they're scared to death to do it.

[00:38:27] Craig Johnson: That is the hardest. And what's interesting is so that, you know, we pivoted from remote seller economic next. To now requiring marketplace facilitators to collect. So those 2 million sellers right now, the states, many of them, I believe, think, okay, we've got the marketplace, facilitator, facilitators, collecting and remitting, but how many of those sellers only sell on a marketplace?

Very few, just FYI.

[00:38:53] Judy Vorndran: That is what I learned by talking to companies. I'm like, and I actually thought it was interesting. They even went down the marketplace pivot. I'm like, you got Wayfair, you don't need marketplace. I know. I felt like it was putting more of the onus on Amazon. Fine. Okay. You want to leave on a punish them and Etsy and eBay and some of these larger vendors, but these companies are going on their own too, right?

Like they're using. And they're using their own website, their own marketing. They're not relying on FBA. They don't want to be relying on it. So they've doubled their license requirements

[00:39:21] Meredith Smith: and it's complicated to kind of get all the information. We have one client that we're trying to integrate. They're like, oh, Hey, we did this.

Oh. And then now he added AWS to sell herself with her. Oh, now we're going to sell through Salesforce is marketplace and then, oh yeah, by the way, now we want to sell merch and we're going to like layer in. Um, Shopify, we're just like, can you just pick one, please? Because we're still not up and running on

[00:39:45] Judy Vorndran: all the layers we want all the players know because we want to get customers.

[00:39:50] Craig Johnson: Exactly. And that's, that's from my perspective, that's what I want a business to focus on growing its business. I don't want a business to focus on. I have to do my taxes. I have to calculate sales tax. Let somebody, yeah. You know, do that. And you know, you mentioned the marketplace sellers and the remote sellers in the marketplace facilitators, and you know, we just completed a disclosed practice.

I don't know if, again, if you're familiar with this or not, are the business community and our member states got together and said, look, we've got all these remote sellers that are out there. We've got marketplace sellers that are out there. They're wondering, you know, when do I have to collect? When do I have to register?

You know, do I, do I include my marketplace sales in my. My total sales, when I'm computing the thresholds and trying to determine what's taxable, what's taxable and what's not. Or when do I have to register what I don't. So we put together these disclosed practices. There's about 75 questions. That all of our states had to respond to this year when they did their annual compliance reviews.

So we're due on August 1st that asks questions about their thresholds. How do you calculate it from the remote seller perspective from the marketplace seller perspective and from the marketplace facilitator perspective, we've said, look, we want states. We don't care if you're members of Streamlined or not.

This is important information. For sellers to have to know and understand where they need to be collected. Sellers want to comply. They they're not, they don't have any problem with it. It's no I'm going to call it. It's no skin off their back. If you make it easy for them and, and you make it. So it's clear when they do or don't have to collect.

So we put that out there and have that out there for all of our, our member states to complete, or that have.

[00:41:33] Meredith Smith: Yeah. So I think Craig, this has been a really great discussion. And so we're really, you know, again, thankful for your time. And I think it's also been really enlightening for me and Judy to kind of hear your perspective, thank you for sharing.

And hopefully we can touch base again and you know, in a couple of years and see if we've gone up from 24, maybe we'll make Tennessee a full

[00:41:52] Craig Johnson: one. Yeah. Yeah. I'm certainly hopeful that we will. I think that, you know, I, I think in the, in the course of. I give it maybe a couple of years, I think there will end up being some sort of challenge on undue burden and that alone may encourage some states to look closer at whether it's Streamlined or the non-member state option to participate in Streamlined.

But if we can get the business community to pushing some of the states that aren't members and saying, Hey, take a look at this. We're more than after you go meet with any of those states and explain, you know, what the, you know, what the benefits are of having them participate with us. And I think the other thing.

Getting the word out, you know, I eat sleep and breeze sales tax. I tell people that all the time Wayfair

[00:42:45] Meredith Smith: oh, I'm going to go over here. I hear someone else more interesting calling,

[00:42:51] Craig Johnson: but you know, we think of, and I think of it's like, how can people not have heard about. But there are so many businesses that don't know anything about it yet. Oh, I just had a

[00:43:01] Judy Vorndran: conversation with one yesterday. Like really? I mean, that was in the New York times, the Washington post, like I've never seen sales stats front and center on every presentation, no demand in my life, you know?

And anyway, yeah. But here we are three years later. All right. Three years later. Yeah. That's a interesting issue in and of itself as well. You're like, you're

[00:43:22] Craig Johnson: really late to the party. And I will tell you, I mean, obviously you folks in dealing with all the different types of businesses that you deal with as well, if you, there are things that you think Streamlined and again, Judy, sorry, you know, you're in Colorado and I can't help you there, but if there are things that you look at and say, Hey, these are.

If Streamlined could address it certainly helped my clients and other states. I mean, I think people that know me know me well enough to say that, Hey, look, I'm, I'm willing to listen. I'm willing to bring it to the governing board and have them consider it. I think some people maybe on the governing board or in the states are saying, Hey, you listen to business too much.

Craig, we have to listen to business. If we're going to make things easier, we have to understand from the people that are actually doing the work on a day-to-day basis, what's causing the problem and then figure out what. You know what the response is and work with them on. Okay. What do we see as a solution that works from both the state side and the S and the seller side.

Well, I

[00:44:19] Judy Vorndran: mean, government, we businesses, the government's invoicing engine, like you're kind of being mean to your sales arm. Right. Cause, but for them you don't have a job because there's no money coming in. This is, is funding government. And so are we individually? So it's, it's, it's a, it's an interesting issue.

You know, you understand you the rules and they've been placed the people you want to pump, protect the public, this, but you also have to understand that that money came from someone else and it needs to be administered fairly and evenly. And so the tax risk and comply with it. And the more complicated you make it, the more people.

I'm doing it. I'll roll that all. Roll the audit lottery. Yup.

[00:44:57] Craig Johnson: Well, it's, let's face it. Sales tax is based on voluntary compliance by sellers. And if you don't want sellers to comply, make your laws difficult as possible because you're exactly right. They're going to go, what am I going to do? Um, you make your, you make your law easy.

And I, like I say, if they build it or if you build it, they will come. And you know, that's what we want to continue to, to push. All

[00:45:19] Meredith Smith: right. Well, in that spirit of collaboration, I think we'll end there. Thank you again, Craig. And this has been SALTovation, until next time.

[00:45:27] Craig Johnson: All right. Thank you. I really appreciate you having me.

[00:45:31] Meredith Smith: This podcast is for educational purposes only and is not intended, nor should it be relied upon as legal tax accounting or investment advice. You should consult with a competent professional to discuss specifics of your situation and the applicability of the information presented.

Questions asked and answered in this Episode:

  • What is Streamlined Sales Tax Governing Board?
  • What are some of Streamlined’s major accomplishments?
  • Why aren’t the other 22 states registered with the board?

What You Will Discover:

  • [00:44] What is Streamlined Sales Tax Governing Board?
  • [02:48] Some of their major accomplishments
  • [07:40] Their central registration system for sellers
  • [13:22] Why other states don’t register to participate
  • [19:38] Creating uniform definitions using candy as an example
  • [29:13] The resolution to allow non-member states to participate
  • [35:47] Survey results from registered sellers
  • [41:34] What Craig is hopeful for the future?


  • “We’ve made significant improvements and significant strides in making it easier for businesses.” – Craig Johnson [02:43]
  • “We didn’t really have, I don’t believe, a true appreciation for all the various nuances multi-state businesses face. We knew our laws inside and out. I knew our laws inside and out. Quite frankly, expected multi-state businesses to know them just as well, but while we’re focusing just on our laws, multi-state businesses, they’re trying to do this and they’re focusing on every state’s laws that they’re operating in. And I think as part of our accomplishments, we now as states have a much better understanding and appreciate really for what multi-state businesses face and the challenges that they have.” – Craig Johnson [05:24]
  • “If you’re not in a Streamlined state and you’re going to make sales in any one of our member states, you can still register through Streamlined.” – Craig Johnson [13:11]
  • “We are trying very hard to walk that fine line of where does simplification or where does simplification in state sovereignty, where’s the ideal spot for them to meet?” – Craig Johnson [21:16]
  • “I want a business to focus on growing its business. I don’t want a business to focus on ‘I have to do my taxes. I have to calculate sales tax.’ Let somebody else do that.” – Craig Johnson [39:53]
  • “We have to listen to business. If we’re going to make things easier, we have to understand from the people that are actually doing the work on a day to day basis. What’s causing the problem? And then figure out what the response is and work with them, like ‘Ok, what do we see as a solution that works from both the states’ side and the seller’s side?’” – Craig Johnson [43:58]

Relevant Links:

Streamlined Sales Tax Governing Board:

Craig Johnson on LinkedIn: