The Streamlined Sales Tax Governing Board (SSTGB) is nearing approval of a pilot voluntary disclosure agreement (VDA) program that would offer participating states a two-year lookback period for qualifying remote sellers. The proposal could launch as early as January 1, 2027, and is intended to encourage businesses with unreported sales tax liabilities to come forward voluntarily.
While the concept appears straightforward, the proposal raises a broader question: Can a shorter lookback period drive meaningful compliance without sacrificing too much historical tax revenue?
Why States Are Revisiting Voluntary Disclosure
Since the Supreme Court’s 2018 decision in South Dakota v. Wayfair, states have expanded their ability to require remote sellers to collect and remit sales tax. Although many businesses registered and complied with the new economic nexus rules, thousands of sellers remain out of compliance, often because historical liabilities have become difficult or expensive to address.
State tax administrators continue to face a practical challenge. Businesses that have exceeded economic nexus thresholds for several years frequently confront significant tax, interest, and professional compliance costs. For some companies, those costs create a disincentive to address prior-period exposure.
The SSTGB pilot represents an effort to remove some of that friction.
What Makes This Proposal Different?
Most traditional voluntary disclosure programs limit lookback periods to approximately three or four years, while also providing penalty relief and a path to compliance. The SSTGB proposal would shorten that period to two years for participating states.
At first glance, reducing a lookback period by a year or two may not seem significant. However, for a business that has been selling nationally for several years, the difference can substantially reduce:
- Historical tax exposure
- Interest assessments
- Data reconstruction efforts
- Professional service costs associated with remediation projects
For businesses that have delayed addressing historical nexus obligations, a shorter lookback period could make voluntary disclosure a more practical and financially manageable option.
The Real Goal: Bringing More Businesses into Compliance
The pilot is less about forgiving past liabilities and more about increasing future compliance.
From a state’s perspective, collecting two years of tax and bringing a seller into the system may be more valuable than pursuing businesses that never voluntarily register. The proposal could also reduce administrative resources spent identifying and auditing non-filers.
The SSTGB appears to be betting that a more attractive disclosure program will generate broader participation and ultimately increase long-term revenue collections.
Potential Benefits for Remote Sellers
For businesses with historical nexus exposure, the proposal could create an opportunity to revisit compliance decisions that may have previously appeared cost prohibitive.
Organizations that could particularly benefit include:
- E-commerce retailers
- Marketplace sellers
- SaaS and digital product providers
- Manufacturers selling into multiple states
- Businesses preparing for acquisitions or due diligence reviews
- Foreign companies with U.S. economic nexus obligations
A shorter lookback period may allow these businesses to quantify exposure more easily and move forward with registration and compliance efforts.
Not Everyone Will View the Proposal Favorably
The proposal is not without potential criticism.
Some states may question whether reducing lookback periods leaves too much historical revenue uncollected. Others may raise fairness concerns, particularly for businesses that registered and complied immediately after Wayfair while competitors delayed registration for years.
Streamlined officials have acknowledged these concerns but argue that disclosure programs ultimately help place noncompliant remote sellers on a more level playing field with businesses already collecting tax.
Key Questions Still Remain
As the SSTGB works toward final approval, several important details remain uncertain:
- Which member states will participate?
- Will participation be consistent across all participating states?
- Will penalty relief mirror existing VDA programs?
- Will interest continue to apply?
- Will taxpayers that collected but failed to remit tax qualify?
- How will the pilot interact with existing state-specific VDA programs?
The answers to those questions will ultimately determine how attractive the program becomes for businesses evaluating historical sales tax exposure.
Key Takeaway
If approved, the SSTGB’s proposed two-year lookback pilot could be one of the most significant sales tax compliance developments since the adoption of economic nexus standards following Wayfair. By reducing the historical cost of coming into compliance, the program may encourage more businesses to address outstanding liabilities while helping states capture revenue that might otherwise never be collected. Whether the initiative succeeds will likely depend on its ability to strike the right balance between compliance incentives and revenue protection.
Looking Ahead
Businesses that have identified potential sales tax nexus exposure but delayed action due to the cost of remediation should begin evaluating their options now. The evolving SSTGB proposal may create new planning opportunities, but companies should carefully compare any future streamlined program against existing state voluntary disclosure agreements and other available compliance alternatives.
If you have any questions or are interested in learning more, we are here to help. Please do not hesitate to reach out to discuss your specific situation.
This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.
