The Senate recently approved an Internet sales tax bill that, if also approved by the House and signed into law by the president, will require online retailers to collect sales tax for the states where their customers order from. What does the Internet sales tax problem and the potential passage of this bill mean for businesses? Here are some details to consider.
* Who is supporting this bill, and why?: Some of America's largest retailers are supporters of the bill, including Walmart, Target, Amazon and Best Buy. The argument is that it is unfair that offline sales are subject to a tax while online sales are not. Presumably, with online sales resulting in an estimated $23 billion in lost sales tax revenue, several states are also in favor of the bill.
* Who the bill applies to: In its current form, the Mark etplace Fairness Act applies to those businesses who generate more than $1 million in annual sales. eBay is currently leading the charge to amend the House-version of the bill to exempt any business generating under $10 million in sales or with fewer than 50 employees.
* Software: The bill requires that the states requesting sales tax from online retailers provide free software for businesses that computes their tax rates. Businesses are exempt from liability due to problems with the software or inaccuracies by the state.
* Remote sales agencies: States will also be required to set up remote sales agencies to handle sales tax issues so that online retailers will not have to deal with each separate city and the sales tax it collects.
Without a doubt, the emergence of online sales has transformed the economy. And the Marketplace Fairness Act will undoubtedly transform how online retailers do business. Helping you with your business management s oftware is our job. Rest assured, we are staying appraised of this situation and are ready to help you make the transition as seamlessly as possible. For more information on how we can work with you on sales tax software solutions, contact us.
