The “Main Street Fairness Act” is drafted “to grant states the authority to require all sellers, regardless of nexus, to collect those states’ sales and use taxes“. What does this mean, and how will it affect you as a consumer or an Internet merchant?
Get answers to your questions from experts at The Federal Tax Authority.
What Internet purchases will be subject to sales tax?
Thank you for the question. Please refer to our previous response to this question
I have read that compliance costs of The Streamlined Sales Tax Project — especially for small firms – could well outweigh the probable benefits of taxing all remote purchases.
Couldn’t the states recoup lost revenue and help make-up budget shortfalls with more aggressive pursuit of multi-channel, multi-state retailers and greater use tax enforcement, without a federal mandate imposed on all inter-state retailers?
Compliance costs for small and large firms will be minimal once Fed-Tax.net launches it’s sales tax lookup and management service – details to come soon!
As far as states engaging in “more agressive pursuit” – states are already engaged in extensive enforcement efforts for larger retailers as you describe.
The larger issue at hand is regarding smaller purchases – a significant share of e-commerce is conducted by “small” Internet retailers (those with less than $1M in revenue). Although seemingly small due to their lower annual sales revenue, thier impact on lost states revenue adds up quickly due to the sheer numbers of these smaller vendors. A study compiled by the Univeristy of Tennessee calculated that in 2007, the states lost approximately $2.2B in sales tax revenue from e-tailers at this scale.
I live in Colorado, which likely will refuse to join SSTP because of the many Colorado home-rule cities. If Colorado refuses, will I as a small business owner be allowed to participate in TaxCloud or in the SSUTA’s CAS and CSP automations, even though Colorado goes it alone?
Dear AnonymousTwo. Thanks for your comment. Yes, a Colorado small business owner can participate in TaxCloud. TaxCloud calculates sales tax due for every taxing jurisdiction in the US (over 13.000). And, TaxCloud is easy to implement (our goal is less than 20 minutes) and is free to you as a merchant. The only difference between a SSUTA state and a non-participating state (from TaxCloud’s perspective) is that for Colorado and other non-participating states we can only calculate the taxes due. You as a business owner would have to remit the taxes due to Colorado. (For SSUTA states we can handle the remittance as well). Hope this helps. Feel free to contact me if you need any additional information. Beatrice Vaccaro, Fed-Tax.net, 206 452 1686. bvaccaro@fed-tax.net.