No doubt you’ve heard about the Marketplace Fairness Act, but do you know what it means and how it could affect your business? Here’s a quick read to learn more about the Marketplace Fairness Act and what it could mean to you.
What is the Marketplace Fairness Act?
The Marketplace Fairness Act is a current federal legislation piece that if passed, could give states the power to require out-of-state businesses to collect sales tax everywhere they sell – including remote retailers with no physical presence.
Who will the Marketplace Fairness Act affect?
As it is currently written, the Marketplace Fairness Act is expected to affect a multitude of businesses that make interstate transactions. If put into place, it could require those meeting a certain threshold to collect sales tax in numerous additional jurisdictions, if not all. If this bill becomes law, states could gain authority to make remote businesses collect sales tax, some within 180 days of the bill’s passage.
Which states can collect sales tax from remote businesses if the Marketplace Fairness Act passes? And how quickly?
All 22 Streamlined Sales Tax state members (23 on January 1, 2014) could be ready to implement sales tax collection 180 days after the bill passes. 20 other states have been identified to easily implement the Marketplace Fairness, which would happen about 180 days after state legislation is passed. See how soon states could enforce the Marketplace Fairness Act.
So if the Marketplace Fairness Act doesn’t pass, am I in the clear?
Not necessarily. We are already starting to see a shift in how tax on remote sales is perceived. Although the Marketplace Fairness Act is positioned at the federal level, states like California, New York, and Florida have already passed new nexus laws regarding online sales, and how business collect taxes.
What can I do to prepare?
The ever-changing landscape of sales tax not only takes focus away from your core business, but missed updates or improper calculations can also carry financial risk. With more than 11,000 taxing jurisdictions in the United States – and with the over 5,500 changes to tax rates, rules, and boundaries that occurred in 2010 alone – researching, entering, tracking, and updating tax information is becoming increasingly time, and resource, intensive. Automating sales tax management with technology is a great way to prepare for potential changes that could result from the passing of the Marketplace Fairness Act.
Automating the traditional processes associated with manually calculating and managing sales tax helps organizations:
- Save time– by eliminating the need to research rates or build and maintain tax tables
- Increase accuracy– with address validation and auto-jurisdiction assignment
- Mitigate risk– with easy to access and review reports
- Gain efficiency– by filing and remitting payment for taxes in minutes
- Focus on what really matters – making great products, providing great services, continuous growth
Interested in learning more? Download our legislative update Breaking Down the Current Marketplace Fairness Act of 2013.
by Avalara