We’ve got more Internet sales tax news! You may recall that the Marketplace Fairness Act, which would allow states to collect sales tax from purchases made online, passed in the Senate in 2013 but never made it to the House floor. At the end of the 2014 session, House Speaker John Boehner voiced, “significant concerns about the bill,” and tabled it indefinitely.
Although it sounds like the Marketplace Fairness Act is dead, the topic of Internet sales tax is far from over. House Judiciary Chairman Bob Goodlatte circulated a discussion draft about online sales tax that is meant to be a way to re-start the conversation.
Unlike the Marketplace Fairness Act, this discussion draft proposes that, “States would be allowed to enter into a multistate agreement to collect sales tax on out-of-state purchases. Once a multistate agreement is in place, online retailers located in a member state would remit sales taxes to that state, based on state of origin’s sales tax rate and regardless of where the customer is located. Via a combined clearinghouse of sorts, the funds collected on all of these “remote sales” would be doled out to the appropriate states based on a formula. Simple? Maybe. After all, it’s tentatively called the “Online Sales Simplification Act of 2015.” You can see the full discussion draft here and determine if you think so!
Curious about our take? This draft differs significantly from the Marketplace Fairness Act, which we never endorsed because of its punitive nature and compliance burden to smaller businesses. It’s too early to tell, but this proposal seems to be going in the right direction in that at least remote sellers will not be required to keep track of rates in multiple states, nor file returns in multiple states in which they do not have taxable presence. There are still several questions to be asked and answered regarding this Act, but we feel that it’s a good start. This bill may represent a good compromise between states that are currently missing out on sales/use taxes and online sellers that wish to expand their marketplace without the huge compliance burden of collection and recordkeeping. Stay tuned to this blog for updates as this bill works its way through the legislature.
We’ll stay on top of the topic of Internet sales tax and how this bill or others like it progress. Keep an eye out for new updates as they unfold, and please contact us if you have any questions about this legislation or how any other multistate tax issues may affect your business.
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 and the California Manufacturers’ Partial Sales Tax Exemption. To learn more, contact us today at www.MilesConsultingGroup.com.