Over the past year staff has received a number of inquries on how the Streamlined Sales Tax Project (SSTP) has affected the modular industry.

Background

In early 2000 state policymakers, working through the National Conference of State Legislatures(NCSL), formed the Streamlined Sales Tax Project (SSTP). The goal of the project was to reduce the burden of collection for all sellers, and creating a voluntary collection system for remote sellers with no requirement to collect and remit state sales tax. The SSTP Taskforce created the Interstate Sales Tax Agreement.

The Interstate Agreement seeks to create uniform definitions within tax laws, rate simplification, simplified administration procedures, and the use and funding of newer technology.

The agreement does not infringe on the rights of individual states to choose what is taxable and exempt, still allows for separate rates for states and local jurisdictions, and allows for an individual state and its local governments to use a common tax base.

Implementation

By 2002, 34 states plus the District of Columbia had approved the recommendations set forth by the SSTP Interstate Agreement. By early 2003, state legislatures began debating and adopting provisions of this agreement.

Modular housing is referred to in the Insterstate Agreement. Essentially the agreement does not cover the sale of modular homes, meaning it is still the responsibility of individual states to regulate the sale of modular homes as they see fit.

For instance:

Under Section 302: State and Local Tax Bases the provisions of the section do not apply to sales or use taxes levied, among other things, "the retail sale or transfer of motor vehicles, aircraft, watercraft, modular homes, manufactured homes, or mobile homes."

Under Section 308: State and Local Tax Rates, this does not apply to sales or use taxes levied, among other things, "the retail sale or transfer of motor vehicles, aircraft, watercraft, modular homes, manufactured homes, or mobile homes."

Under Section 309: Application of General Sourcing Rules and Exclusions from the Rules, does not apply to sales or use taxes levied, among other things, "the retail sale or transfer of motor vehicles, aircraft, watercraft, modular homes, manufactured homes, or mobile homes."

Under Section 323: Caps and Thresholds, the provisions of the section do not apply not apply to sales or use taxes levied, among other things, "the retail sale or transfer of motor vehicles, aircraft, watercraft, modular homes, manufactured homes, or mobile homes."

Based on MHI’s communication with NCSL, and with the provisions exempting the industry, the method of tax collection for modular housing will remain unaffected by any changes made.

For more information on the sales and use tax treatment of modular housing in 25 states, visit the Sales and Use Tax Guide by clicking here. Please note that access to this information is limited to members only and is password protected.

For more information contact Thayer Long at (703) 558-0678 or tlong@modularcouncil.org