The Marketplace Fairness Act ("MFA") was re-introduced in the Senate this week by Sens. Michael B. Enzi (R-Wyo.) and Richard J. Durbin (D-Ill.). This bill is similar to legislation passed by the Senate (69-27) in May 2013. The MFA would require all remote sellers to collect and remit sales taxes for products and services sold from State A into State B, even if the seller in State A has no connection to State B (such as a building, distribution center or employees).
In the House, the last Congress viewed the MFA with more skepticism, and failed to bring the bill to a vote. In the current Congress, action remains uncertain in the House, where Judiciary Chairman Bob Goodlatte has been working on legislation that would tag the sales tax reporting requirement to the jurisdiction in which the seller (as opposed to the buyer) resides.
TechAmerica opposes the MFA, as we are concerned with the new compliance burden it would impose on all businesses, especially small and medium-sized businesses. Under the MFA, businesses would be required to collect and report sales taxes for sales into any state, thus drastically increasing the sales tax compliance burden. This could force some sellers to abandon Internet sales into states, when the cost of compliance exceeds net income from such interstate sales.
The debate should be refocused to balance the needs of states to collect these taxes with the ability of businesses to cover these new compliance costs. States need to collect sales and use taxes owed, but the costs associated with moving this compliance burden from individual taxpayers onto businesses must also be weighed.
