What wasn’t said at yesterday’s Senate hearing, but should have been: Free!

At yesterday’s Senate Commerce Committee hearing, numerous senators voiced their support for the Marketplace Fairness Act, which would close a loophole that allows online retailers to avoid collecting sales tax.

Several senators, among them Senator Lamar Alexander (R-TN), said that they were particularly concerned about states’ rights. Under the current system, states cannot enforce their own sales tax laws; the bill would allow states to decide if they want to require online retailers to collect sales tax from state residents. Others cited concerns about simple fairness: Local small businesses—particularly those that sell high-end goods such as cameras, jewelry, and electronics—often serve as showrooms for customers who then buy online to avoid paying sales tax. The inequity is hurting local small businesses across the country.

Opponents of the bill were primarily concerned with the costs and complexity of collection, saying that it would be too difficult and expensive for small online retailers. Several supporters responded that if the bill is passed, more sales tax management services will be created and the market will act to bring down costs.

Scott Peterson, Executive Director of the Streamlined Sales Tax Governing Board, testifies before the Senate Commerce Committee, and even shows off to the members of the committee how easy and accessible sales tax has become – that you can even do it on a common device, like this iPad (and yes, that’s TaxCloud).

Which brings us to what wasn’t said: The market has already acted. A completely free sales tax management service is available right now. TaxCloud calculates the sales tax due for any region of the county, collects and remits sales tax, files sales tax returns, creates detailed records of sales tax transactions for shop owners, and even provides indemnification and audit relief—in short, it resolves every concern raised by Senator Kelly Ayotte (R-NH). It does all this at absolutely no cost to the business.

It’s too bad that this wasn’t mentioned by any of the bill’s supporters, because it directly counters opponents’ primary objection to the bill. We don’t have to wait for the market to act to bring down the costs of collecting sales tax. That cost can range from zero to as much as a business wants to pay, depending on the service a business chooses—there are multiple options already on the market today, including Accurate Tax, ADP TaxWare, Avalara, CCH SpeedTax, Exactor, and TaxCloud. Importantly, a no-cost option is already available.

Overall, the hearing showed a great display of support from many senators—and, we were pleased to note, except for only a few instances (which we will resist detailing here), an atmosphere of professionalism, courtesy, and collegiality reigned, even among those who disagreed on the issues.

You can view a video of the hearing on the Senate Commerce Committee website.

4 Responses to What wasn’t said at yesterday’s Senate hearing, but should have been: Free!

  1. Ken Miller says:

    All this to-do regarding sales taxes/use taxes, is missing the point. The real intent of this legislation is to increase the money flow into the coffers of the greedy states that can’t manage their budgets without taxing their constituants more and more. The concept of competition between the states over the taxes they levy is a good one in that it helps keep a lid on out of control legislatures. California is a perfect example of this, as the taxpayer flees and the feeder at the public trough demands more.
    Those who contend this latest scheme to tax the people yet another way is a good idea are the ones who have figured out a way to profit from this idea. This includes the owners of this blog, who contend that their service is “free”. The altruism is heartening but there’s a buck to be made here, and they have figured out a way to do it.

    • FedTax says:

      Yes, TaxCloud is free for the retailers because the service is paid for by the states. This is they way it should be… Let me explain.

      If a citizen in a state votes for a school levy to be funded by their local sales tax, then any retailer selling to that citizen should collect that sales tax from that citizen and send it to the state (this is the law today in 45 states). However, where it gets more complicated is when the retailer is not in the same state. Certainly, an out-of-state retailer would be annoyed if they had to buy software and build new systems just to collect sales tax from their customer (our remote citizen) and remit it to that remote state. However, if that remote citizen’s state made it extremely easy, and even paid for the software and/or services necessary for that out-of-state retailer to comply with the laws of that state (and the will of their customer), and would indemnify and hold harmless that out-of-state retailer for any errors (because the state provided the software/services), then wouldn’t that be a reasonable resolution to this issue?

      The good news is, that is exactly what the Marketplace Fairness Act does.

  2. […] a hearing on the Marketplace Fairness Act before the Senate Commerce Committee on August 1, Senator Lamar […]

  3. W. Spackman says:

    No cost? Please try not to be miss-leading on this issue. While I heartily applaud the provision of the TaxCloud service for merchants and agree that it is a major contribution to addressing barriers to implementation for the collection of online sales taxes, everyone concerned with this issue needs to recognize that there are many other considerations bearing on merchant’s ability to provide taxing jurisdictions with collection services. Just look at the integration and implementation manuals for your TaxCloud service – 40 plus pages of API’s, TIC’s Auth/Capture codes, etc. And what about the exponentially expanded exposure this policy would place on merchants.
    I have followed the incubation of this effort for many years in the hope that the root of the problem would be addressed before any real effort to impose the burden took hold. The taxing jurisdictions need to man up to the issue of resolving the 9,000 plus different tax formulas in order to move this effort forward properly. The Streamlined Sales Tax Initiative does not live up to its name. In fact it appears that rather than actually work toward a uniform tax code, at least at the state level, as the mission suggests, the energy of the coalition has been primarily directed toward creating legislative momentum and pressuring merchants to accept the burden of calculating, collecting, reporting and remitting sales tax on behalf of the millions of residents represented by the participating states.

    I believe that most merchants, as do most Americans, truly appreciate the importance of the services funded at the local level in their communities by the proceeds of sales tax revenues. I believe that most merchants would support the effort to assist states and their local tax authorities in collecting and remitting these taxes if the SSTI truly met its mission of real simplification. One rate per state – that needs to be an unequivocal prerequisite for this legislation to move forward.

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