Marketplace Fairness Act: What is Fair? How Will You Comply?

The U.S. Senate approved the Marketplace Fairness Act (MFA) 69 to 27 yesterday.  It now heads to the House of Representatives for a vote.  If approved, online retailers will be required to charge sales tax in 45 states plus District of Columbia.  This legislation could have broader impact for any business with sales greater than $1m into a state. The MFA is expected to face more resistance in the House. 
WHAT IS REALLY FAIR?
I think the article in USA TODAY  raises an interesting point - brick and mortar businesses currently only collect sales tax in the state where they have a store.  Online businesses currently only collect sales tax in the state where they are based.  Isn't that fair?  Why should online businesses now have to collect sales tax in any state in which they have a sale but no physical location?  Brick and mortar businesses don't have to do that.  Isn't that discouraging online businesses and encouraging brick and mortar businesses?  Is that really "leveling" the playing field or "tilting" it in the direction of brick and mortar businesses?  Or is tilting the playing field in favor of large online businesses against small online businesses?
HOW WILL YOU COMPLY?
Regardless of whether it is constitutional or it levels the playing field or doesn't, is a battle between big and small businesses, is unfair, is more fair or will cause the growth of Internet sales to diminish - one thing is certain - if it is enacted, businesses will have to figure out how to comply without hurting their businesses.
States are supposed to simplify their tax codes and provide software to help businesses comply.  During that process, companies will have to decide if they are going to hire someone in-house to handle the compliance or hire an outside firm to handle.  Finding the right outside consultant at the right price may be the difference.
If this is enacted and you need help, please contact me to discuss how to find the best resource for your company.
For more info on the Marketplace Fairness Act, check out my earlier post:  The Marketplace Fairness Act: Is It Really Fair?

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Brian Strahle is the owner of LEVERAGE SALT, LLC where he provides state and local tax technical services to accounting firms, law firms and tax research organizations across the United States.  He also writes a weekly column in Tax Analysts State Tax Notes entitled, "The SALT Effect."  For more info, visit his website: www.leveragestateandlocaltax.com

You can reach Brian at strahle@leveragesalt.com.

Connect with Brian on LinkedIn. Follow Brian on Twitter. Join the Leverage | SALT LinkedIn Group, connect and contribute with your colleagues!  

Because state and local taxes are deceptively simple and endlessly complicated.

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