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States of the Union

States back a uniform sales-tax system that would raise additional revenue. What will the change mean for you?

This story appears in the February 2004 issue of Entrepreneur. Subscribe »

Strapped by an eroding sales-tax base, many states are pushingfor a streamlined tax system through adoption of the StreamlinedSales Tax Agreement. Under this multistate agreement, member stateswould collect sales tax on interstate sales using uniform rules.The aim is to capture some of the taxes states are losing on mailorder and other remote sales. If it becomes operational, thestreamlined tax will have a big impact on any business that sellsproducts, and those with lots of multistate sales will be mostimpacted, says Mike Stewart of Waller,Lansden, Dortch & Davis in Nashville, Tennessee.

Currently, a state can't collect sales taxes on merchandisethat a business sells in another state unless that business has asmall sales force, a company plant or an office in that otherstate. But under a streamlined system, that will change. Companieswill be responsible for collecting sales tax not only for in-statesales, but for remote sales as well.

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