We think the Main Street Fairness Act H.R. 5660 has a number of strong points – it would modernize existing laws, promote a streamlined approach to tax collection, return billions of dollars to state revenues and put all businesses (local and remote) on equal footing. One more important point that has been overlooked is that it supports consumer privacy. The Main Street Fairness Act will eliminate the need for states to enact burdensome and privacy encroaching reporting laws to enforce sales tax collection. States have already started requiring online merchants to report on consumers’ purchases – notably North Carolina and Colorado. Attached is a Press Release from FedTax.net that explains this point of view. We also have an online Petition that lets people express their support for all of the benefits of HR 5660.
Petition Announced in Support of Bill that Helps Protect Consumer Privacy
September 2, 2010
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Who Benefits from Local Services?
August 20, 2010This blog post on Internet Retailer.com titled The Great E-Retail Sales Tax Debate presents a thoughtful look at whether and when the sales tax loophole for web businesses will close. The answers, according to the writer (Jack Love, President, CEO Internet Retailer), are ‘Yes”‘ and ‘Soon’, but he has a few issues with the Main Street Fairness Act’s approach to the problem. His arguments, and our FedTax.net responses are as follows:
1. Since local brick and mortar stores benefit from police protection, fire protection, roads etc. — but web retailers do not — web retailers should not bear the full cost of local tax.
We believe that sales tax, from a policy point of view, is meant to tax consumption by residents and use those funds for a variety of local initiatives, including not just fire, police and roads, but also parks, hospitals etc. Also, the local services used by local businesses is much smaller than the usage by the residents of the communities themselves.
2. Requiring web merchants to calculate and collect state and local sales tax would be a tremendous burden.
If you follow our FedTax.net blog, you know our answer to this objection – Not True! We have designed and built our TaxCloud service to comply with the Streamlined Sales and Use Tax Agreement (endorsed by 45 states). TaxCloud is easy for web merchants of any size to implement and operate. And, we offer TaxCloud free to merchants.
3. Imposing a federal excise tax on e-commerce would be a better solution.
We believe that the interstate commerce laws prohibit this kind of solution, and that the state-based approach advocated by MSFA and SSUTA is a much more reasonable and workable approach. Also, regardless of whether this is a good idea, it is not pending in Congress and would take a long time to pass — if the issues of interstate commerce could even be resolved. The Main Street Fairness Act is real, it is in front of Congress now and it has the backing of legislators, state government officials and a long list of retailer organizations including the National Retail Federation and the Retail Industry Leaders Association.
We look forward to more discussion on this article!
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Blog Response: PC Mag’s Dvorak is wrong.
August 16, 2010We couldn’t agree more with this response to PC Mag’s editorial blog post last week. American Programmers Independent wrote this brief commentary response to John C. Dvorak’s mis-characterization of HR 5660.
We too have been longtime fans of Mr. Dvorak’s work, and were disappointed by his clear lack of understanding (or even any basic attempt at understanding) this matter. As an editorial, we understand and respect that it is merely his opinion, but we expect more journalistic integrity from the Ziff Davis editorial board.
Our attempts at outreach to Mr. Dvorak and PC Magazine since this editorial was published have not been responded to.
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Systemax CEO: Online Sales Tax Collection is Imminent
August 10, 2010According to this article at Multichannelmerchant.com, Systemax CEO-technology products group Gilbert Fiorentino announced during a session at eTail East in Baltimore that “States are under pressure to raise their revenues, and with e-commerce sales rising, they are seeing these revenues go out of state,” Fiorentino said. “I don’t see the states ignoring it for a long time. Sales tax has become an issue for everyone, and in the near future we’ll all be collecting.”
Systemax owns TigerDirect.com, CircuitCity.com and CompUSA (which has retail locations), so Mr. Fiorentino has a perspective on both sides of the sales tax collection discussion.
if you are at the eTail East conference, look for FedTax.net’s VP Sales, Carl Stefanelli. He would be happy to explain how our TaxCloud service makes sales tax collection and remittance a breeze for internet merchants of any size.
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San Francisco Chronicle: “Time to collect state tax on Internet sales”
August 3, 2010There is a good article in the San Francisco Chronicle today by Bill Dombrowski, the CEO of the California Retailers Association.
The article does a nice job outlining the need to change the current state of affairs related to internet retailers refusing to collect local sales taxes, while all other retailer are required to do so.
Oddly, the article does not mention the Main Street Fairness Act (HR 5660) now before congress – an omission which can only be related to printed page layout constraints. We commented to add this important detail for the readers of the Chronicle. Naturally, we also pointed out that TaxCloud can now calculate the accurate local sales tax for every jurisdiction in the country — for free!
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Internet Retailer Article 8/1/10 “Tax Attack”
August 2, 2010Despite the scary headline, this Internet Retailer Article by Paul Demery does a good job of analyzing the sales tax environment, providing a lot of factual information and commentary from all sides of the issue. FedTax.net CEO David Campbell is quoted in the article which points out that TaxCloud is designed to be extremely easy and efficient for web retailers to use – and that it is completely free for merchants.
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The Times Leader: “States eye online retail for tax revenue”
August 1, 2010Mike Zapler, a writer for the San Jose Mercury News, wrote a good summary piece, “States eye online retail for tax revenue” which appeared in The Times Leader (a Wilkes-Barre Pennsylvania newspaper). We have not seen the article run in the Mercury News yet, but we will certainly be watching for it.
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Friend of Bill (Delahunt)
July 29, 2010
There was a press conference in Washington DC today about The Main Street Fairness Act, a bill introduced by Congressman Bill Delahunt (D-MA) on July 1, 2010. The bill aims to help states retrieve billions of lost sales tax revenues that are currently owed but go uncollected on remote (online and catalog) sales. Rep. Delahunt was joined by South Dakota Governor Mike Rounds (R-SD), Former Speaker of the Iowa House of Representatives Chris Rants (R-IA), state leaders and small business owners. Here is the Press Release on Rep. Delahunt’s website. Coverage of the press conference is included in this Washington Post Article.
FedTax.net CEO R. David L. Campbell was on hand to show support for the MSFA bill, and to respond to questions about whether sales tax calculation and collection can be done without causing a burden on retailers. The answer is an emphatic ‘YES’ . TaxCloud is our free, easy-to-use sales tax calculation and remittance service for retailers. It’s the only service created solely to comply with the Streamlined Sales and Use Tax Agreement (SSUTA) at a scale to support all internet merchants.
Here’s a picture of David with Representative Bill Delahunt.
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Response: LA Times Article “Plugging the Web tax loophole”
July 27, 2010http://www.latimes.com/news/opinion/editorials/la-ed-nettax-20100726,0,1649969.story
Yesterday’s Editorial in the LA times made a strong case for the provisions of the Main Street Fairness Act, notably that this is not a new tax (as opponents are spinning it). Rather that tax laws have not kept up with the changing sales environment. The editorial correctly notes that the Supreme Court rulings often referenced as opposing collection of sales tax by remote sellers (Quill, Bellas Hess) actually pre-date the Web itself. It also notes that arguments which fall back on the existence of ‘use taxes’ — the longstanding requirement that individuals report and remit the equivalent of sales tax on their own – are not productive and that the problem could be better solved at the retailer level.
The impact to states of a change in law is signficant. According to a study cited by the National Conference of State Legislatures, by failing to collect that tax California alone will lose over $3.3 billion in 2010. A link to that study is below. The efforts of the Streamlined sales tax project combined with passage of the Main Street Fairness Act will give states the opportunity to collect these taxes and distribute them to local communities, as determined by local law. TaxCloud proves that technology is indeed up to the task – and it is available at no cost to the merchants themselves.
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News: Internet Retailer reports on TaxCloud
July 16, 2010Have you seen it yet?
Paul Demery, Managing Editor of Internet Retailer just wrote about TaxCloud – Check it out!
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Forbes: eBay Sellers Shirk Sales Tax Law
July 15, 2010Just an FYI, if you haven’t seen it already, you need to read this article by Janet Novack of Forbes.
It describes a study “Do eBay Sellers Comply With State Sales Taxes?” just published in the National Tax Journal (a quarterly publication only available to National Tax Association members).
The study monitored 21,000 eBay listings posted by 7,000 sellers with 9,300 buyers over a 24 hour span and saw $755,905 worth of consumer electronics sold, but only $60,249 of those sales were made between a seller and buyer in the same state. The study goes on to note that only 18% of sellers bothered collect sales tax at all (in-state or otherwise).
eBay may be a little concerned, which may explain why they are opposing the Main Street Fairness Act so forcefully. eBay has taken a position in the press that the requirements of the Main Street Fairness Act would impose a crushing burden on small businesses. This is very surprising coming from a company whose business model is to provide turnkey services that enable anyone to operate a storefront with very little effort. It is hard to believe that sales tax calculation is beyond the ability of eBay to provide.
Naturally, we would be happy to help eBay easily bring their sellers into compliance with all local sales tax laws, at absolutely zero cost to eBay or eBay’s sellers.
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NCSL’s new “lost revenue” map
July 10, 2010
Anyone looking for a more approachable way to see exactly how much sales tax is not being collected on internet purchases right now should be sure to check out the new interactive “lost revenue” map recently published by the National Conference of State Legislatures.
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TaxCloud™ Breezes Free Sales Tax System Across the Internet
July 2, 2010FedTax.net announces the launch of TaxCloud, a free, web-scale sales tax calculation engine designed to support all internet merchants. The Main Street Fairness Act, introduced the same day, would require all internet merchants to collect sales tax.
Seattle, Washington – July 2, 2010 – The Federal Tax Authority (FedTax.net), a private company that is committed to making it easy for online merchants to collect sales tax, today announced the launch of its TaxCloud™ sales tax calculation and remittance service. TaxCloud is free and easy to use, and it can be integrated with virtually any accounting or e-commerce shopping cart system. TaxCloud calculates the sales tax due on any purchase in any tax jurisdiction in the nation and stands ready to assist merchants with meeting the requirements of HR 5660, commonly referred to as the Main Street Fairness Act, which is now pending before Congress.
FedTax.net has been designated a Certified Service Provider (CSP) by the Governing Board of the Streamlined Sales and Use Tax Agreement. The CSP designation means that TaxCloud meets rigorous standards for sales tax calculation. Merchants who sign up with TaxCloud can instantly calculate the local sales tax due on any internet transaction for over 13,000 tax jurisdictions.
The Streamlined Sales and Use Tax Agreement (SSUTA) is the result of the cooperative efforts of 44 states, the District of Columbia, local governments, and the business community to simplify sales and use tax collection and administration. The agreement minimizes costs and administrative burdens for retailers that collect sales tax, particularly retailers operating in multiple states. It encourages internet and mail order retailers to collect tax on sales to customers living in the SSUTA member states. It also aims to level the playing field, so that local brick-and-mortar stores and remote sellers operate under the same sales tax rules.
TaxCloud can perform all of a merchant’s sales and use tax functions, (except the merchant’s obligation to remit tax on its own purchases). Each member state and associate member state has certified the accuracy of the TaxCloud service. TaxCloud automatically monitors tax codes and incorporates any changes—so all TaxCloud merchants maintain compliance with all local sales tax laws with zero effort. TaxCloud also generates reports and automatically files state-by-state Simplified Electronic Returns for the merchant. In addition, merchants who use TaxCloud will qualify for amnesty from the SSUTA member states for failing to collect sales tax in the past.
“Achieving Certified Service Provider status is a great accomplishment for FedTax.net,” said R. David L. Campbell, Chief Executive Officer. “Our company was founded specifically to offer online merchants a free and easy way to accurately calculate and remit voter-approved state and local sales tax. The introduction of this legislation by Congressman Delahunt is an important step towards the equitable collection of sales taxes, while simultaneously providing local municipalities with much-needed revenues.”
TaxCloud takes advantage of an extensive cloud computing infrastructure. “By using cloud computing, we were able to build a massively scalable, highly available, and secure service at a much lower cost, which allows us to offer our service free to our customers. We designed our system from the ground up to be easy to use by businesses of any size, even those with no dedicated IT departments,” noted Paul Onnen, Chief Technical Officer and Chief Information Security Officer.
Now that all the work involved in achieving CSP designation has been completed, FedTax.net is moving into the next phase of the company’s mission: To modernize the sales tax subsystems for every e-commerce and point-of-sale system in the country.
About FedTax.net
The Federal Tax Authority (FedTax.net) is a private company that is committed to making it easy for online merchants to collect sales tax. FedTax.net was founded by technology veterans with extensive experience in the large-scale development, deployment, and support of internet-based services in environments with extremely high transaction volumes and financially sensitive information. The management team has been directly involved in building some of the most recognizable brands in e-commerce, including Google, Microsoft and Expedia.
FedTax.net has been designated a Certified Service Provider by the Governing Board of the Streamlined Sales and Use Tax Agreement. The company’s TaxCloud service enables e-commerce retailers to easily calculate and remit voter-approved local sales taxes across the country. TaxCloud precisely determines the correct amount of sales tax due for any transaction, including state, county, city, and localized taxes. It is free and easy to use, and it can be easily integrated into virtually any accounting or e-commerce shopping cart system.
FedTax.net is headquartered in Seattle, Washington, and has an office in Stamford, Connecticut. For more information on FedTax.net, please visit http://FedTax.net or e-mail service@FedTax.net.
For additional information please contact:
Beatrice Vaccaro
The Federal Tax Authority (FedTax.net)
(206) 452-1686
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Main Street Fairness Act Introduced!
July 1, 2010Representative Delahunt (D-MA) introduced the Main Street Fairness Act today. The bill number is H.R. 5660. The current co-sponsors are Conyers, Capuano, and Herseth-Sandlin.
Here’s the official announcement: Delahunt Introduces Main Street Fairness Act
Summary of HR 5660 | Complete Text of HR 5660
The first article we have found about it is from the Retail Industry Leaders Association.
The second article about it is from the National Conference of State Legislators.
The third article is from Small Business Television (SBTV.com).
The fourth article is from The Hill.
Here the latest status: http://thomas.loc.gov/cgi-bin/bdquery/z?d111:H.R.5660:
status as of 7/1/2010: Referred to the House Committee on the Judiciary.
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Response: Time Magazine Cover Story – The Broken States of America
June 30, 2010
I trust you have already seen and read the cover story of Time magazine this week, but if you haven’t, check it out now.
The article does a masterful job of describing the current financial crisis in most states. It even details how the states have not seen such financial calamity since the Great Depression. Strangely, though, the article does not address the action states took after the Great Depression to ensure such a situation would never happen again. Since you are reading our blog, you probably already know what they did: They created the sales and use tax system.
Their goal at the time rings true to this day, more than 70 years later. The purpose of the sales and use tax paradigm was to have a more progressive, consumption-based system of taxation. After establishing sales and use tax as a way to finance local services, many localities were able to fund up to 40% of their annual budgets through the collection of sales taxes. Unfortunately, the brightest minds of the 1930s could never have imagined a marketplace of the scale and ubiquity of the internet. As shoppers have migrated online, largely for convenience, the practice of collecting local sales taxes at the time of the transaction has not migrated with them. And now that the internet marketplace is maturing, local governments have seen proceeds from sales taxes drop to approximately 16% of their annual budgets—hardly a coincidence.
Most internet merchants do not collect local sales taxes because the Supreme Court, in 1967 (Bellas Hess) and again in 1992 (Quill), ruled that it would be too difficult for a “remote seller” (mail-order catalogs at the time) to calculate and remit local sales taxes for the thousands of tax jurisdictions in the country. In these rulings, the court did point out that one day technology would likely solve this problem, but even then, they said, only an act of Congress could grant states the authority to compel out-of-state merchants to collect sales tax (just as bricks-and-mortar merchants are required to do). Today, many internet merchants rely upon the Quill ruling to justify their non-collection of sales taxes. (Ironically, the Quill Corporation, which litigated this matter against North Dakota all the way to the US Supreme Court in 1992, now collects sales taxes on all their internet sales—even in states where Quill Corp. has no physical presence.)
Hopefully a few of our legislators in Washington, DC, will read the Time magazine article and agree with us that the time has come for federal legislation requiring out-of-state merchants to collect local sales taxes. It is time to introduce (and pass) the Main Street Fairness Act. The Main Street Fairness Act does not contemplate or suggest any new taxes; it simply allows states to require merchants to collect sales tax at the time of a transaction, instead of relying upon the consumer to report and pay these taxes later.
Regarding the Supreme Court opinion that collecting sales tax is too difficult for remote sellers: Our TaxCloud service launches tomorrow! TaxCloud manages local sales tax calculation for every jurisdiction in the United States. In the 23 (soon 24) states that conform to the Streamlined Sales and Use Tax Agreement, TaxCloud also manages collection, remittance, and sales tax returns for all TaxCloud registered merchants—all for free.
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