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What is the Streamlined Sales and Use Tax Agreement (SSUTA)?

The SSUTA is a cooperative effort of 44 states, the District of Columbia, local governments and the business community to simplify and make more uniform sales and use tax collection and administration by retailers and states.  It is intended to reduce the cost and administrative burdens on retailers that collect the sales tax, particularly retailers operating in multiple states. It would encourage "remote sellers" selling over the Internet and by mail order to collect tax on sales to Washington customers.  It seeks to make local "brick-and-mortar" stores and remote sellers all operate by the same rules and in the same competitive environment.

What are "remote sellers?"

Remote sellers are businesses that sell products to customers in a state, using the Internet, mail order, or telephone, without having a physical presence in that state.  These sellers currently cannot be required to collect and remit sales tax as brick-and-mortar stores must do.  The U.S. Supreme Court ruled in 1992 (Quill vs. North Dakota) that the burden of collection was too high given the number of taxing districts in the country and variations among states as to what was taxable and at what rate.

Why is this agreement needed?

Local brick-and-mortar stores are operating at a competitive disadvantage to remote sellers who aren't collecting or paying taxes.  Sometimes local stores find themselves serving as showrooms for Internet sellers.  Prospective customers check out the merchandise locally but buy the product online to avoid paying sales tax. 

How does the change in sales tax work?

Previously, businesses that ship products directly to customers code the local sales tax to the location from which the product is shipped.  For example, if a customer in Issaquah buys a couch from a retailer in Seattle, and that couch is shipped to the customer from a warehouse in Kent, Kent gets the local sales tax revenue on that sale.  Under the destination-based sales tax that most states use, the tax would go to Issaquah.  The rate is determined by the local rate in the destination city or unincorporated county. The destination-based sales tax doesn’t affect local taxes when the customer takes the product home.  In that case the tax applies to the location where the customer picked up the product.  This change in sales tax went into effect July 1, 2008.

What happens now?

Washington's petition for membership has been granted, enabling the state to become a member of the SSUTA on July 1, 2008, the effective date of the legislation. Washington will then have a seat on the Governing Board of the Agreement and will be able to vote on amendments to and interpretations of the SSUTA. From that point on, it will begin receiving sales taxes voluntarily collected by remote sellers.

How many states have passed legislation conforming to the agreement?

Twenty-one states have passed conforming legislation so far, not counting Washington.  The agreement went into effect on October 1, 2005, and over 1,000 remote sellers have already registered to begin collecting and remitting sales taxes on sales to purchasers in these states.

What does Washington need to do to become a member of the Agreement?

With the passage of SSB5089, Washington has enacted the remaining legislation necessary to come into conformance with the requirements of the Agreement.  This includes changing its local sales tax system from an origin-based system to a destination-based system, providing amnesty for remote sellers who voluntarily begin collecting sales tax, providing compensation for certified service providers that will coordinate and process the sales tax reported by remote sellers, and providing assistance for small businesses that need to adapt to destination-based sales tax.

What is Washington doing to prepare for SSUTA?

The Department of Revenue is educating businesses about the changes in the state’s tax system, particularly retailers affected by the shift to destination-based sales tax.  The state of Washington will also provide direct assistance to some of those businesses in the form of free certified service provider services or a credit against taxes due. The Department had developed a credit mechanism to help eligible businesses switch to a new destination-based sales tax system, established a state/local committee to determine the amount of mitigation to provide to negatively affected local governments, accommodated tax returns filed by remote sellers, adopted new rules and amended others, and posted updates on our web site. The Department has been working with individual retailers and retailer organizations to make the transition from origin-based sales tax to destination-based sales tax as simple as possible.

Which Washington businesses need to change the way they collect sales tax?

The sales tax changes primarily affect retailing businesses that deliver products to customers, either directly from their stores or from warehouses.  These businesses will need to code the local sales tax to that of the destination city or unincorporated county.  Examples include oil deliveries and drop shipments from out of state.  The changes do not affect motor vehicles, trailers, semitrailers, aircraft, watercraft, modular homes, and manufactured and mobile homes  See our detailed guidelines on the new rules.

More information

Destination examples

National Streamlined Sales Tax web site

Registration system

Membership petition

Contact us with your questions or concerns.



Destination-based Sales Tax at a Glance (pdf)


More destination-based sales tax publications