While I rarely agree with Sen. Ted Cruz, he is correct on this topic. The Marketplace Fairness Act (S743) is bad for business.

The bill proposed will allow States to reach across State Lines and force all businesses with remote sales ($1M or more) to collect Sales tax that the purchaser would owe in his State.

The compliance costs to small business will be more than the tax collected.

A recent TRUST
http://truesimplification.org/wp-content/uploads/Final_TruST-COI-Paper-.pdf
shows there is a startup cost between $80K and $290K. These costs include software integration and costs of potential audits. Yearly maintance costs would be well over $50K.

Proponents of the legislation deny this, stating 'free' software is available. Yea, I can get a 'free' puppy too, but they need to be fed, and poop a lot too! They fail to consider that software needs to be installed ( a cost), inventory needs to coded with a taxability status ( a cost), 45 or more monthly tax returns must be filed, even if the amount due is $0 (another cost), not to mention the audit risks and demand letters coming from various State agencies (yes, another cost). There are over 300 different shopping carts on the internet, and the CSPs (Certified Service Providers) accommodate less then 40. No two software solutions share the same taxability database, so if a seller wishes to switch, he has to start over. We have no idea if CAs 'free' software will talk nice to NJs 'free' software, so there is another integration problem. There are no 'free' software solutions for mail-order catalog sellers.

Proponents also claim software solutions will auto file your tax forms. That might work for sellers that only sell from a single platform, but does not apply for those that sell multi-platform i.e. eBay/Amazon/website. Amazon will collect 3p sales tax now ( at a cost of 2.9%) but will not file taxes on the seller's behalf.

Proponents claim $23B in uncollected revenue, quoting NCSL (National Council of State Legislators) The number is totally false. The numbers come from a study by the Univ. of Tennessee in 2008 (revised 2012). It assumes no taxes have ever been collected. Broken down, $14B is for online sales, and the rest made up by B2B sales, auto sales, and private sales where goods cross State lines.
83% of online sales are dominated by the BigBox.coms now (Walmart.com, Target.com, BestBuy.com and Amazon.com (collects tax in 24 States), so the number drops from $14B to less than $2.5B
Most B2B sales involve items for resale, and therefore are tax exempt. Most auto sales have Sales Tax collected at time of registration, but U of TN never bothered to check that factoid, and it's doubtful 'private' sales ever cross the $1M threshold.

As we can see, the revenues States project to collect, does not exist or has already been collected.

Webrooming vs. Showrooming
Mom & Pop Main St. stores are demanding efairness, claiming they are selling at an unfair advantage, given that online sellers do not collect Sales Tax, which can be between 3-10% of the purchase price. The fact is polls have shown that only 2% of the buying public make their final purchase decision based on Sales Tax alone. That $400 item at the Brick & Mortar store can be had for $350 online. Even with Sales Tax, online is still the winner on price. While shoppers do walk into a store and compare prices with their smartphone (showrooming) the store owner has no idea if the final buy is made online with added shipping costs, or the sale made at a competitors store across the street (webrooming). Fact is, webrooming (shoppers who research first on the internet for a product) drives $1.2T in brick & mortar sales.

http://dealnews.com/features/Know-Before-You-Go-A-Basic-Guide-to-Webroom...

MFA is bad law, plain and simple. Rep, Goodlett is correct to analyze his version of the bill for a more simplified solution.

There are many solutions, and need for revision to current proposals.

My proposal is to have the merchant accounts (the credit card processors) collect the tax and remit directly to the States (States pay related fees), along with a unified taxability database, based on product UPC codes. The advantages are many:
~States receive instant funds
~ It's paperless, and cheapest of all software solutions.
~ no privacy issues
~ No exemptions required
~ Minimal law change needed to enact.

Merchant accounts charge 2-5% on every tax dollar collected. Those funds do not belong to me or the Merchant account, but rather the State DOR! For a WalMart that does $10M business a quarter, at 6% Sales Tax, would save over $12K in collection fees.

Comments

xcergy's picture
xcergy 4 years 32 weeks ago
#1

And a followup:

I asked Bernie Sanders on a 'Lunch w Bernie' segment:

https://www.youtube.com/watch?v=TtcfHJySQOc

And yes Thom Hartman, you have it WRONG!!!!! Amazon supports MFA. They too have joined the lobby network (Walmart) to crush small online competitors.

xcergy's picture
xcergy 4 years 23 weeks ago
#3

Feel free to join my FaceBook group. Unlike the lobby driven FB groups, this groups is free to all debaters on the subject:

https://www.facebook.com/groups/stop.sales.tax.fees.now/

xcergy's picture
xcergy 3 years 44 weeks ago
#4

And Chaffets wants to pass RTPA. Here is my rebuttal to a CSP (certified software provider) as to why this legislation will kill small business etailers:

http://pointofsale.com/201508267387/Point-of-Sale-News/Ecommerce-Vendor-...

rs allen 3 years 44 weeks ago
#5

Bullshit, all that's required is no more than a simple bookkeeping adjustment. Cost of sold product plus state tax on whatever shipping area delivered to. Print out the monthly sales totals.....cut maybe at most 50 extra checks for the individual states.

Items sold to those with state tax numbers for resell are responsible to return the tax to the state, not the original seller. The original seller only needs to keep the tax exempt number on file so any individual state can track and can go after the reseller for not paying (or charging, or charging and keeping) the tax that should be collected for the state. NOT THE ORIGINAL SELLER, they have no responsiblity for how that happens beyond keeping that exempt number up to date in their files (which by the way, they already do). That's why we have tax exempt numbers. So nothing new there.

Like I said just a simple bookkeeping adjustment. No big over-haul.

xcergy's picture
xcergy 3 years 42 weeks ago
#6

R I G H T
only another 49 checks to write.

Obviosly, you are not an online retailer faced w 10K tax districts (not defined by zip code); software providers that do not share a common taxibility database, Audit demand letter to prove you are tax exempt, software updates ( a cost) cost & more costs, that will kill small business online retail .... the exact plan Walmart lobby $$ have in mind!!!

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