FAQs - about Certified Service Providers

A CSP calculates and remits the sales and use tax due on your behalf on your sale of products or services sourced to Streamlined States in which you are registered for through the SSTRS. 

The CSP is responsible for determining the taxability of all products and services you sell, determining the jurisdiction to which the sale is sourced, and for calculating the proper state and local sales or use tax that applies to each transaction at the time of the sale for any sales sourced to the Streamlined Member States. 

The CSP is not responsible for your obligation to remit tax on your purchases.  You may discuss use tax reporting with your CSP.  If you do not report use tax through the CSP you will need to file a separate use tax return directly with that state.

A CSP may not report other taxes you may currently report on your state sales tax return, such as lodging or tourism tax.  Talk to your CSP to determine if you need to report those taxes directly to the state.

Please contact the state in which tax is due to determine how to report any tax not reported through the CSP.

The CSP may provide services to sellers beyond those listed in Question 1. The CSP may charge for these additional services. These may include, but are not limited to: 

(a) General accounting services, 
(b) Invoice preparation, billing and accounts receivable collection services, 
(c) Tax calculation or reporting services unrelated to the CSP services; and, 
(d) Consulting services.

A seller that qualifies as a CSP-compensated seller, as defined in the CSP contract, that contracts with a CSP has the following benefits:

a. Registration and Registration Updates – A seller contracting with a CSP can go through the CSP to register and to update registration data with all Streamlined Member States.

b. Tax Calculation – The CSP integrates its system with the seller's system to determine what's taxable, the applicable state and local rates and the amount of tax to collect at the time of the sale.  

c. Free Monthly Return Preparation and Filing – The CSP prepares and files the applicable sales tax returns with the Streamlined Member States.  The CSP-compensated seller that contracts with a CSP is not charged a filing fee from the CSP since the CSP is compensated by the Streamlined Member State.  (Do you qualify for free CSP services?)

d.  Audits – The CSP responds to and provides supporting documentation with respect to notices of sales and use tax audits by the Streamlined Member States.  The CSP must also provide the Streamlined Member States with transactional data supporting the monthly remittances for CSP-compensated sellers.  During an audit of a CSP-compensated seller, the Streamlined Member States must go through the CSP to conduct the audit, rather than contacting the seller directly.  Audit questions are presented to the CSP.  The CSP then reaches out to the seller to collect any additional supporting documentation required for the audit.  A seller that does not qualify as a CSP-compensated seller will be contacted directly by the state.

e.  Liability Relief –  Sellers that contract with a CSP are not liable for errors in calculating the incorrect tax that result from the seller or the CSP relying on erroneous data provided by a Streamlined Member State on tax rates, boundaries, taxing jurisdictions or incorrect data in the library section of the state's taxability matrix.

Tax Calculation Software - A seller that uses a CAS will have software that will determine the taxability of the product or service sold, the tax rate of the product or service, and the taxing jurisdictions to report the tax for.

Liability Relief - Sellers that use a CAS are not liable for errors in calculating the incorrect tax that result from the seller or the CAS relying on erroneous data provided by a Streamlined Member State on tax rates, boundaries, taxing jurisdictions or incorrect data on the library section of the state’s taxability matrix.

Compensation - The seller will receive an allowance from each state in which the seller does not have a legal requirement to be registered. The compensation is a percentage of the tax due, for a period not to exceed 24 months. This allowance is in addition to any discount or other allowance the state may provide.

A CSP may not report other taxes you may currently report on your state sales tax return, such as lodging or tourism tax. Talk to your CSP to determine if you need to report those taxes directly to the state.

Contact the state to determine how to report taxes such as use tax on purchases, tourism tax, or lodging taxes that are due in addition to the sales tax.

No, to use a CSP you must be registered for that state through the SSTRS.

If you are interested in contracting with a CSP, contact the CSP to discuss their services before you register.  Once you are under contract with the CSP, the CSP can register your company through the SSTRS.

You may register through SSTRS even if you are already registered in some of the Streamlined States.

Yes, You may contract with a CSP after you are registered.  Contact the CSP you wish to use. 

If you registered through the Streamlined Sales Tax Registration System (SSTRS) prior to having a contract with a CSP, you are responsible for filing the returns and paying the tax directly to each state, until the contract with the CSP begins.  The CSP will file the returns and remit the tax for you once the contract has begun.

Contact the state to determine if you can retain the state collection allowance.

Because the CSP receives compensation from the state for providing its services to CSP-compensated sellers at no charge, the state may or may not allow these sellers to also retain the state collection allowance.

The Streamlined States pay the CSP for providing their CSP services to “CSP-compensated seller” at no charge.  These states allow the CSP to retain a percentage of the sales tax reported and paid on time to that state for each “CSP-compensated seller.”

A CSP may charge you for services in state in which you are do not qualify as a CSP-compensated seller. 

The term “CSP-compensated seller” is defined in the CSP contract Section D.2.
 
This definition is only used to determine when a CSP will receive compensation from a Streamlined Member State for providing services to the seller.   

This definition does not determine a seller’s legal requirement to register to collect and remit sales and use tax in a state.  Compensation under the CSP contract is for the CSP services and is not payment to a seller for the administration of any state or local sales tax.

For a CSP to receive compensation for services provided to a “CSP-compensated seller,” the seller must register through the Streamlined Sales Tax Registration system (SSTRS).

(See Do you qualify for free CSP services?)

Depending on the reason for the error you may receive liability relief.  

You will receive liability relief when the CSP calculates the incorrect tax due to an error on the State’s current rate or boundary file if the CSP relied on that data to determine the tax rate.  

You will receive liability relief when the CSP relies on the information the state provides in the Library Section of its Taxability Matrix to determine if the product sold is taxable.   

To the extent the state laws allow, the state will also provide liability relief for use of incorrect information the state provided in the Tax Administration Practices section of the Taxability Matrix.

To the extent the state law allows, the state will provide liability relief for a CSP relying on the state’s certification of the CSP’s taxability rules.   

You will not receive liability relief if you or the CSP incorrectly classify your product into an incorrect product category or to an incorrect tax rule.  When you integrate your system with the CSP’s tax rules the CSP will need to identify which of your products fall under which tax rules.  This is referred to as “Mapping.”  The CSP is responsible for any errors in mapping products but may require reimbursement from the seller for mapping errors if the seller did the mapping.

States use these terms to identify which sellers use a Certified Service Provider (CSP) or a Certified Automated System (CAS).  

The Technology Models are:

A “Model One” seller is a “CSP-compensated seller” that has contracted with a Certified Service Provider (CSP) to perform all the seller's sales and use tax functions, other than the seller's obligation to remit tax on its own purchases.   

A “Model Two” seller is a seller that has contracted with a provider to use their CAS.  A CAS is designed for a business that wants to use the tax calculation software that has been certified by the states while keeping the responsibility for filing returns and remitting the tax. 

A “Model Three” seller has a proprietary system that calculates tax due for each jurisdiction that meets the performance standards set by the states.  A seller must have a certain level of sales and a proprietary system that calculates tax due for each jurisdiction.

A “Model Four” seller does not use a CSP or a CAS.

Sellers that use a CAS will receive an allowance for a period not to exceed 24 months following the seller’s registration through the SSTRS from each Streamlined Member State in which the seller does not have a legal requirement to be registered. This allowance is in addition to any discount or other allowance the state may provide.

A CAS is software a provider developed, administers and supports that the Streamlined Member States have all certified.  To be certified, this software must be in compliance with the performance standards the states set to assure it correctly calculates the amount of tax due on each transaction.

Yes, if a seller that uses a CSP changes their business and qualifies as a “CSP-compensated seller” as defined in the CSP contract, the CSP can begin collecting compensation.  The state’s nexus laws do not preclude a CSP from receiving compensation as long as the seller meets the definition of a “CSP-compensated seller” contained in the CSP contract.

The CSP must update the status of the seller in the SSTRS before that state will allow the CSP to claim compensation.

See CSP Contract Section D.2 (Definitions) for criteria for a “CSP-compensated seller.”

If the CSP filed the return without payment timely and provided the notice required for failure to pay under the contract and the CSP remits the taxes due within 60 days of the due date (and must be within 10 days of seller providing payment to the CSP), the CSP is entitled to compensation. The state may offer a longer time period than 60 days. If payment is not made within the time period allowed the CSP does not receive compensation from the state but may pursue the lost compensation from the seller.    

The CSP can get compensation if state improperly rejects the return per the CSP contract.

Sellers that use a CAS will receive an allowance for a period not to exceed 24 months following the seller’s registration through the SSTRS from each Streamlined Member State in which the seller does not have a legal requirement to be registered. This allowance is in addition to any discount or other allowance the state may provide.

No.  The CSP only receives compensation for sales or use tax reported on sales made by the CSP-compensated seller.

A remote seller that is only required to report and remit sales tax in a state because it meets the economic nexus threshold of  that state qualifies for free CSP services in that state.

The CSP reports taxes using the Simplified Electronic Return (SER).  The taxes are remitted electronically using either Automated Clearing House (ACH) Debit or ACH Credit.

If you contract with a CSP and you are a “CSP-compensated seller,” the states will generally contact the CSP for any audits or questions concerning your returns and tax payments. If additional documentation is required, the CSP will contact you for that documentation.  The purpose of the Streamlined Agreement is to reduce the burden of tax compliance for you, which includes reducing the number of auditors at your business.    

If you use a CAS, the state will contact you directly to conduct the audit.

 No, any audits would be performed through the CSP.  The individual seller would not be contacted by any individual state.  The purpose of the SSUTA is to reduce the burden of tax compliance for sellers.  Streamlined’s goals are to ensure uniformity across states in registration, sourcing of sales, exemption administration and tax return filing.  One of the intentions of Streamlined is to limit the intrusion of auditors on sellers.

Contact each state -- See Disclosed Practices on Tax Matrix

Personally identifiable information is information that identifies who you are.  With very limited exceptions, a Certified Service Provider (CSP) performs its tax calculation, remittance, and reporting functions without retaining the identity of the consumers. The CSP must certify that personally identifiable information is only retained and used to the extent necessary to document sales to exempt purchasers and to identify proper taxing jurisdictions.