In the wake of the Senate’s 69-27 vote in favor of the Marketplace Fairness Act of 2013, (the new internet sales tax law) and the impending vote in Congress, the outcome of which determines whether the bill becomes enacted into law, many e-tailers have found themselves in the unenviable position of uncertainty. They are unable to fully understand what the bill would mean for their business particularly and thus cannot take measures to prepare themselves. To assist e-tailers with this unwelcome and onerous task CCH, makers of the Sales Tax for Magento software suite, and one the of six CSP’s (certified software providers) approved by the bill, released a special report outlining what the bill actually would mean to online merchants; we’ll cover some of the highlights here.
Sales Tax for Magento Users: Demysitified
Proponents of the bill claim that their main motivation is leveling the playing field between brick and mortar merchants and their online counterparts who under current statutes have no requirement to charge sales tax. Additionally, states are looking to recoup their fair share of the $23 billion in tax revenue industry experts claim was “lost” in 2012.
Opponents claim that the bill fails to take into account exactly how difficult it would be for small businesses to maintain compliance in the myriad different jurisdictions whose laws they now find themselves subject to, and that adoption of the bill would leave merchant open to audits and other tax enforcement procedure in states where they have no legislative representation.
To begin collect sales tax from these “remote sales”, as the bill calls them, states would be required to meet certain criteria, among them:
- Creation of a “single entity administration”, which means that the states must create:
- A single entity responsible for all administration, processing and audit duties.
- A single audit for all remote sellers.
- A single sales and use tax return for all remote sellers.
And this entity has would have responsibility across all state and local jurisdictions
- A “uniform tax base” for the purposes of simplifying compliance to possible levels.
- Provision of software to handle all sales and use tax calculations and filing requirements.
While it is prudent for all e-tailers to begin planning how they will cope with these impending changes it is far from certain that the bill will pass through Congress at this time.
“Although the legislation received strong bipartisan support in the Senate, its future passage in the House isn’t a sure thing,” said CCH Principal Federal Tax Analyst, Mark Luscombe, JD, LLM, CPA. “Supporters claim the issue is about fairness and that Internet sellers shouldn’t enjoy an unfair advantage, but critics say it amounts to a tax increase.”
Hara Partners can get you started with SalesTax from CCH, find out more now.