NASE News

Collection Of Online Sales Tax Looming

Read this article in PDF form here.

By Katie Vlietstra

Many business owners are following with interest the recent passage of the Marketplace Fairness Act of 2013 (S. 734) by the United States Senate. The legislation would allow for states to collect and remit sales taxes from Internet sales. Businesses with revenue less than $1 million in online sales are exempt. 

The bill does the following:

• implements minimum simplification requirements, including providing a single entity within the state responsible for all state and local sales and use tax administration, a single audit and tax return for all state and local jurisdictions, and a uniform sales and use tax base for all state and local taxing jurisdictions;
• adopts a uniform rule for sourcing all remote sales;
• provides information indicating the taxability of products and services and exemptions from tax;
• provides free software for remote sellers that calculates sales and use taxes, files tax returns, and updates tax rate changes;
• and provides remote sellers and certified software providers with a 90-day notice of tax rate changes.

The ability for states to collect sales tax from online sales would provide a much needed stream of revenue, and bring parity to businesses with a physical presence
in those states. Supporters of the legislation argue that the existing disparity in sales tax collection harms brick-and-mortar businesses because they are required to charge and collect state and local taxes of between 5 and 10 percent.

Those against the legislation argue that the complexity of the regulatory burden placed on small businesses would be enormous. While the law requires free software for businesses to utilize, the sheer number of sales tax jurisdictions (9,600) would be challenging for any business, especially micro-businesses, to manage.

The NASE is currently reviewing the legislation and requesting feedback from our members to better inform our legislative strategy as it relates to Marketplace Fairness legislation. Make your voice heard by taking our survey on the Marketplace Fairness Act.

Katie Vlietstra is Director of Government Affairs of the NASE and provides critical insight to policymakers on issues affecting our nation’s self-employed. You can contact her at advocacy@NASE.org.