A few months ago we introduced the Marketplace Fairness Act and explained what it is, how it could affect your business and why you should care about the outcome. At Miles Consulting, we’ve been keeping a close eye surrounding this legislation.
4 Updates Surrounding the Marketplace Fairness Act
Here’s the latest you need to know about the Marketplace Fairness Act:
1. Polling data shows that 70% of Americans support legislation requiring sales-tax collection. When you compare the numbers to polls conducted in previous years, they show the public is increasingly supportive of bills like the Marketplace Fairness Act.
Our take: Would 70% of Americans support this legislation if they understood how it would affect small businesses? Or that with the passage of the legislation they’d be charged sales tax on all online purchases? If so, we think the polls might read differently.
2. Although the Senate passed the Marketplace Fairness Act in May 2013, the bill never made it to the House floor. In the meantime, some states (including California) have passed laws stating that a nexus can be formed through “‘click-through’ or ‘affiliated’ activities.”
Our take: Whether these types of laws are Constitutional is still to be determined. But companies that don’t know about the laws or haven’t been compliant can definitely be in for a rude awakening upon further analysis or audit.
3. House Judiciary Chairman Bob Goodlatte said the Marketplace Fairness Act doesn’t make collecting sales tax easy enough for retailers, yet believes a compromise is possible through a new version of the bill. Principles he thinks need to be dealt with include, “Tax relief for Internet companies, simplicity for business owners and respect for state rights.”
Our take: Raising the limit for “small business” from 1 million dollars in sales to at least 10 million dollars would make the Marketplace Fairness Act easier to consider.
4. Still, keep an eye on the lame-duck session of Congress this year. The Senate lawmakers are planning to, “Link online sales taxes to separate legislation prohibiting Internet access taxes and pass it in the post-election session of Congress.” Supporters of the Marketplace Fairness Act believe combining the online sales tax legislation with a moratorium on Internet access taxes will help push it through the lame-duck Congress.
Our take: These issues are two entirely different things and should be considered separately. Let’s not rush the Marketplace Fairness Act through without thoughtful consideration of all the ramifications.
Do you want to know more about the Marketplace Fairness Act and how it may affect your company? Contact us for the details, and stay tuned for more news as it continues to unfold!
Miles Consulting Group, Inc. is a professional service firm in San Jose, California specializing in multi-state tax solutions. Our firm addresses state and local tax issues for our clients, including general state tax consulting, nexus reviews, tax credit and tax incentive maximization, income tax and sales/use tax planning and other special projects, including the new California Competes Tax Credit. To learn more, contact us today at www.MilesConsultingGroup.com.
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