The Ruling: NY_APPEALS_AMZN_2010_11_04_dec.
This article recently published by the Center on Budget and Policy Priorities outlines that states are currently experiencing the steepest decline in tax receipts on record. “As a result, even after making very deep spending cuts over the last two years, states continue to face large budget gaps.” States experience large shortfalls in fiscal years 2009 and 2010, and the situation is no better for fiscal year 2011 (July 1- June 30 2011). According to the article, at least 46 states struggled to close shortfalls this year.
The need for states to seek new sources of funds is clear; and the Main Street Fairness Act currently pending in Congress is gaining a lot of support from state Governors. In addition to replacing sales tax revenue that has declined as shopping has shifted online (down from 40% to 14% in recent years), the MSFA is viewed as a way to help local merchants compete with remote sellers. Local merchants provide local jobs, which is an added benefit to financially-strapped communities.
According 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.
FedTax.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.
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.
For additional information please contact:
The Federal Tax Authority (FedTax.net)
Originally posted 1/22/2010 – Last UPDATED 6/30/2010 – Wow, there has been a lot of activity in individual States over the last few weeks after the State of New York reported generating $53 million in new sales and use tax revenue from the 30 companies ensnared by their Complex Nexus legislation (often referred to as the “Amazon” Tax – as we have written about before). While Rhode Island and North Carolina passed similar legislation last year, they have not reported how successful their efforts have been. Amazon.com ceased all affiliate operations in RI & NC based upon their adoption of these laws. Amazon has not ceased affiliate operations in New York, but has been engaged in an ugly court battle to challenging the validity and constitutionality of the law. California and Hawaii also considered (but did not pass) similar legislation late last year.
41 States have already identified significant budget shortfalls, projecting the worst budget shortfall ever! Our friends at The Center on Budget and Policy Priorities just released a detailed (and terrifying) report outlining a projected $194 billion deficit for 2010, and another $180 billion deficit for 2011.
As of this writing
four states five states (just added Vermont) seven states (just added Maryland & Illinois) eight states (added California) nine nineteen states (just added Connecticut) added a bunch more have considered some sort of sales (use) tax legislation:
|ALL (FEDERAL LEGISLATION)||HR5660||7/1/10||Main Street Fairness Act||Gives states the right to require remote sellers to collect sales tax. States must be members of the Streamlined Sales and Use Tax Agreement.||Introduced into Congress by Rep. Delahunt (D-MA). Has supporters from both the Democratic and Republican parties, as well as support from states.|
|Arkansas||Entity Isolation||Existing legislation prohibits merchants from practicing entity isolation (i.e. claiming that web operations and store operations are unrelated).||Entity isolation legislation in effect.|
|Existing legislation prohibits merchants from practicing entity isolation (i.e. claiming that web operations and store operations are unrelated).
Separate legislation has been considered to require merchants notify CA purchasers during checkout that they may owe Use tax.
|Entity isolation legislation in effect. The proposed new legislation on Notification passed the Senate 2/18/10 but failed to make it into final budget package.|
|Requires online retailers to provide CO purchasers with a summary warning on web site and invoices and requires retailers to report this information to the state annually. Also requires retailers with over $1 mill annual sales to send a 1099-type notice to the customer. Retailers can avoid these requirements by collecting the sales tax.||Signed into law 2/24/10. Affiliate Marketing rules were considered but not included in the final law.|
|Connecticut||RB5481||3/8/10||Affiliate Marketing ($2,000 threshold)||Died in Committee 5/5/10|
|Florida||SB2552||Other||Proposes FL allocates money to build software requiring credit card companies to collect sales tax.||Unlikely to pass.|
|Georgia||SB512||3/17/10||Contingency Fees||Authorized GA to pay contingency fees to lawyers to sue retailers to enforce collection obligations.||Passed Senate 3/26/10|
|Illinois||SB3353||Affiliate Marketing ($10,000 threshold)||Bill ‘held over’.|
|Indiana||Entity isolation||Existing legislation prohibits merchants from practicing entity isolation (i.e. claiming that web operations and store operations are unrelated).||Entity isolation legislation in effect.|
|Iowa||HF2510||3/1/10||Affiliate Marketing||Died in Committee 3/2/10.|
|Maryland||SB824||Died in Committee before the end of the 2010 legislative session.|
|Mississippi||SB2927||1/20/10||Affiliate Marketing ($0 threshold)||Died in Committee 2/2/10|
|New Mexico||HB50||1/15/10||Affiliate Marketing ($10,000 threshold)||Died in Committee 5/3/10|
|New York||6/1/08||Affiliate Marketing ($10,000 threshold)||NY reported that it generated $53 million in new use tax from the 30 companies affected by its Affiliate Marketing law.||Signed into law April 2008|
|North Carolina||4/23/10||Affiliate Marketing||Signed into law in 8/5/09.|
|Oklahoma||HB2359||1/5/10||7/1/10||Notification||Requires retailers to post a notice to OK residents on the checkout page that they may be liable for use tax, and to disclose this on the invoice.||Signed into law 5/28/10.|
|Rhode Island||7/1/2009||Affiliate Marketing ($5,000 threshold)||Signed into law 6/30/09|
|Tennessee||SB1741, HB1947||3/19/09||Affiliate Marketing
|Died in Committee 4/20/10|
|Vermont||HB661||1/29/10||Affiliate Marketing ($10,000 threshold)||Died in Committee.|
|Virginia||SB660||1/21/10||Affiliate Marketing ($10,000 threshold)||Died in House subcommittee 2/24/10|
Please Note: The information provided on this web site is intended to stimulate discussion about sales tax issues affecting online merchants. While we make every effort to provide accurate information, readers should refer to their own tax counsel, state and local laws and other source documents for more detail.
All of this activity at the state level should provide ample indication to our Senators and Representatives in Washington D.C. that federal action is necessary to prevent a flood of varied state-by-state laws. Urge your Senators and Representatives to ask around on the hill, and find out what is holding up introduction (and passage) the the Main Street Fairness Act!
Here at Fed-Tax.net we are eager to help all Internet merchants easily and automatically calculate and remit correct local sales tax for every jurisdiction in the United States – at zero cost to merchants. We will do this regardless of which system ultimately prevails, state-by-state affiliate taxes, or a federally authorized Streamlined Sales and Use Tax Agreement.
Our TaxCloud service will launch later this year (watch here for our preview release announcement soon), and will demonstrate beyond any shadow of doubt that it is no longer overly burdensome (technically or financially) for remote sellers to comply with all local sales tax laws. We are building TaxCloud to activate the opinion of the Court as originally penned by Justice Stewart in 1967 (and re-affirmed in 1992) which invited congress to act once “the skill of contemporary man and his machines” has solved this problem.
UPDATE – COLORADO SB 1193 2/2/2010: Last night the Colorado House of Representatives voted (on “Shall the bill pass?”) 33 (Yes) to 32 (No). So, they PASSED SB 1193 – Here is the Current (Amended) Bill now on its way through the Colorado Senate.
UPDATE – VERMONT HB 661 Introduced 2/3/2010: Just saw that Vermont also introduced their own version of an affiliate tax late last week. Sorry we missed it.
UPDATE – Colorado SB 1193 Revised 2/8/2010 – the Colorado Senate has revised SB 1193 significantly.
UPDATE – Maryland SB 824 Introduced 2/10/2010
UPDATE – Illinois SB 3353 Introduced 2/10/2010
UPDATE – California Senate passes AB 8 2/18/2010
UPDATE – Colorado SB 1193 is now LAW – The Governor of the State of Colorado – see Emergency Regulation 39-21-112.3.5.
UPDATE OKLAHOMA HB2359 is now LAW. It requires retailers to post a notice to OK residents on the checkout page that they may be liable for use tax, and to disclose that information on any invoice sent to the customer.
MasterCard E-Commerce Executive Joins Technology Start-up
Seattle, Washington – June 17, 2010 – Fed-Tax.net, a company that is preparing to launch web-accessible services to allow merchants to quickly and precisely determine the correct amount of local sales tax due for any transaction, today announced the appointment of Beatrice Vaccaro as Executive Vice President of Sales and Marketing. Ms. Vaccaro brings more than 25 years of experience to the role.
“Beatrice is a fabulous addition to our team,” said R. David L. Campbell, Chief Executive Officer. “In addition to her extensive marketing background, she has significant experience with e-commerce and emerging technologies. In her most recent role she worked closely with internet retailers across the U.S. to roll out MasterCard’s Secure Code protocol. This experience is directly applicable to our efforts toward the upcoming launch of our TaxCloud service. After an extensive nationwide search, we ultimately selected Beatrice based upon her immediately relevant tactical and strategic experience. We are honored she has accepted the position, and we look forward to working with her to modernize the sales tax subsystems for every e-commerce and point-of-sale system in the country.”
Previously, Ms. Vaccaro was Vice President of E-Commerce and Emerging Technology for MasterCard International. She was part of a team responsible for new product and strategic alliance development in e-commerce. Ms. Vaccaro also worked for MasterCard in communications and product development positions. Prior to joining MasterCard, she managed marketing programs at American Express, Avis Inc., and People’s United Bank. She received her B.S. in economics from the Wharton School of the University of Pennsylvania and her M.B.A. in marketing from New York University.
The Federal Tax Authority (Fed-Tax.net) is a private company organized to enable fair and true sales tax neutrality, ensuring a “level playing field” for local businesses and remote sellers alike while simultaneously stimulating local municipalities with additional tax revenues. The company has designed a free, turnkey service that enables e-commerce retailers to easily calculate and remit voter-approved local sales taxes, as required to comply with state and local law. The service precisely determines the correct amount of sales tax due for any transaction (including state, county, city, and localized taxes). It can be easily integrated with virtually any accounting or e-commerce shopping cart system.
The company is headquartered in Seattle, Washington, and has a sales office in Stamford, Connecticut. For more information on Fed-Tax.net, please visit http://fed-tax.net or e-mail firstname.lastname@example.org.
For additional information please contact:
The Federal Tax Authority (Fed-Tax.net)
UPDATE – 5/28/2010 – Georgia’s Governor Sonny Perdue signed the Streamlined Legislation! The bill is now law, taking effect January 1, 2011!
UPDATE – 4/30/2010 – Georgia’s Senate approves Streamlined Legislation! The bill is now sitting on Governor Perdue’s desk for signature. Georgia, you’re on our minds now 🙂(originlly published 4/1/2010) No, we are not speaking about Grammy Award winning pop sensation Lady GaGa. Rather, we are of course speaking about the State of Georgia (the “Wisdom, Justice and Moderation” state).
Last Friday, Georgia’s House of Representatives passed HB 1221 (introduced 2/18/2010) adopting legislative amendments to allow Georgia to become a full Member State under the Streamlined Sales and Use Tax Agreement. This bill has now been introduced to the Georgia Senate and been assigned for consideration by that legislative body’s Finance Committee – we are trying to determine if there is a hearing scheduled, and if so when.
Rumors abound that a certain piece of legislation might be introduced this Thursday!
Increasing state-by-state efforts to recover uncollected sales taxes due for most Internet purchases are creating an increasingly hostile compliance burden on multi-state retailers. If you didn’t think the budget problems were enough to encourage federal action on this matter, perhaps this growing body of state-by-state legislation (such as the so-called “Amazon Taxes,” and aggressive reporting requirements) is enough to compel federal action due to the Commerce Clause of the United States Constitution.
Not to mention, our new TaxCloud service (launching July 1) will eliminate all previous concerns related to undue technical or financial burden (its FREE!) as cited in the 1967 Bellas Hess opinion as the only reason for exempting Remote Sellers from their obligations to collect local sales tax. Bellas Hess anticipated technology could eventually solve the administrative burdens of calculating and remitting local sales taxes for every jurisdiction in the land, but even then only Congress has the ability to grant States interstate collection authority. FINALLY, after 43 years, Congress should now act.
As we like to say here at Fed-Tax.net “Shop Globally, Support Locally!”
California’s AB 2078 adds yet more confusion for multi-state sellers. The law requires vendors to post the requirement to pay sales tax on their websites or in their catalogs, as well as send in regular reports of these sales (Colorado also demands that a detailed notice be sent to the customers). Whereas Colorado’s law applies to businesses that sell more than $10,000 worth of merchandise in their state, California’s requires companies that receive at least $100,000 in the state to send in quarterly reports, which is going to start getting confusing for companies who sell in multiple states. Multi-state sellers should ask their representatives to enact federal standards, rather than continue to have these decisions made on a state-by-state basis.