Governor Jennifer Granholm signed Public Act 172 on June 28, 2004, giving Michigan authority to participate with 42 other states and the District of Columbia in developing a standardized system of collecting sales and use taxes on catalog and Internet sales. Michigan had been part of the initial development of the project but the state’s authority to participate had expired.

The Streamlined Sales Tax Project (SSTP), initiated by the National Conference of State Legislatures (NCSL) and the National Governor's Association, provides a model interstate agreement to streamline the nation’s sales tax system.

It is estimated that a simplified national tax system could save businesses millions of dollars in efficiencies by removing the burden of complying with existing laws, rules and regulations in thousands of jurisdictions. Implementation of the agreement would also create a level playing field between "remote" sellers that are not obligated to collect and remit sales taxes and Main Street retailers, which must collect sales taxes.

Currently, America's sales and use tax system, with 7,500 state and local taxing jurisdictions across the nation, is antiquated, complex, and cumbersome to businesses in today's new economy.

One of the problems with so many taxing jurisdictions is that they often have different laws or definitions of what is taxable. For example, a marshmallow might be defined as a food in one state, but as a candy – and therefore taxed – in the next. That arrangement makes it very difficult for "remote" retailers, such as mail order companies and e-commerce companies, to calculate, collect, and remit sales taxes at varying rates to different state and local governments.

The effort, if successful, would be the first overhaul of the nation's sales tax policy in 40 years, and the first time states had acted together to significantly restructure the system.

A 1992 U.S. Supreme Court case ruled that states must first simplify their sales tax laws in order to require out-of-state retailers to collect and remit those levies. Congressional action or a decision by the high court would be needed to give states that authority.

The bills were signed on June 28 and are Public Acts 172, 173, 174, and 175 of 2004.

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