2. PART 1 – Sales Tax in 2015
• Prior legislation
• What’s currently being considered?
PART 2 – What You Need to Know
• Knowing your responsibility
• Sales tax and Miva Merchant
7. Marketplace Fairness Act 2013
• Passed Senate
• Speaker John Boehner
(R-OH) stalled 18 months
• Expired December 2014
8. 7 Key Principles on Remote Sales Tax
• Rep. Bob Goodlatte (R-
Virginia)
• September 2013
9. 7 Key Principles on Remote Sales Tax
1. Tax Relief
2. Tech Neutrality
3. No Regulation Without Representation
4. Simplicity
5. Tax Competition
6. States' Rights
7. Privacy Rights
10. Online Sales Simplification Act
• January 13, 2015
• Origin Sourcing
• Applies to remote sales
• States must agree to participate or waive
funds
• NOMAD states
• Response
12. MFA 2015 – How it’s the same
• States aren’t required to participate
• States must meet minimum simplification
requirements:
– Notify retailers of rate changes
– Designate a single organization
– Establish a uniform sales tax base
– Use destination sourcing
– Provide free software
13. MFA 2015 – How it differs
Changes from earlier versions:
1. Adds limitation on when taxation begins
2. Exception for small business (under
$1mil)
14. MFA – The Positives
• States receive more money (lost revenue,
use tax)
• Makes it easier for brick-and-mortar
businesses who have to charge tax to
compete with Internet-only sellers
15. MFA – The Negatives
• Arbitrary definition of small business
• Imbalance between exempt businesses
and non-exempt businesses
• No-cost software isn’t necessarily free to
implement
• Undue burden to comply
• Potential of benefitting big-box stores
16. MFA – Who’s For It
• President Barack Obama
• Governors of Maine, Indiana, New Jersey,
Michigan, Alabama, Utah, Idaho, and
Georgia
• Rep. Paul Ryan
• Alliance for Main Street Fairness
• Retail Industry Leaders Association
17. MFA – Who’s Against It
• Electronic Retailers Association
• Direct Marketing Association
• National Taxpayers Union
• American Catalog Mailers Association
• eMainStreet
• Agricultural Retailers Association
• National Center for Policy Analysis
• Computer & Communications Industry
Association
18. Supreme Court Speaks Up
• Justice Anthony
Kennedy calls for
case to reexamine
Quill Decision
19. Other Initiatives
• Amazon reports for use tax purposes
• Direct Marketing Association v. Brohl,
Colorado
• Virginia tied a gas tax increase on January
1, 2015, which will end automatically if and
when a federal law related to Marketplace
Fairness passes
27. Miva – Third-Party Services
• Your website calls out to third-party service
to determine tax for each order
• Rate determined by location of shipping
and destination addresses and tax code
• Relieves the burden of maintaining data
• Costs based on usage
Explain the difference
ASK: Which is easier for states to collect?
Physical presence
Not just a store or office
We’ll define some of the activities that create nexus later on
In general, right now you only have to collect tax on states where you have NEXUS
Destination – use the rate of where the item is being first used (in general, shipped TO)
Origin – use the rate where the item is shipped FROM
Boehner is from OHIO
1. Tax Relief – Using the Internet should not create new or discriminatory taxes not faced in the offline world. Nor should any fresh precedent be created for other areas of interstate taxation by States.
2. Tech Neutrality – Brick & Mortar, Exclusively Online, and Brick & Click businesses should all be on equal footing. The sales tax compliance burden on online Internet sellers should not be less, but neither should it be greater than that on similarly situated offline businesses.
3. No Regulation Without Representation – Those who would bear state taxation, regulation and compliance burdens should have direct recourse to protest unfair, unwise or discriminatory rates and enforcement.
4. Simplicity – Governments should not stifle businesses by shifting onerous compliance requirements onto them; laws should be so simple and compliance so inexpensive and reliable as to render a small business exemption unnecessary.
5. Tax Competition – Governments should be encouraged to compete with one another to keep tax rates low and American businesses should not be disadvantaged vis-a-vis their foreign competitors.
6. States' Rights – States should be sovereign within their physical boundaries. In addition, the federal government should not mandate that States impose any sales tax compliance burdens.
7. Privacy Rights – Sensitive customer data must be protected.
Goodlatte
New Hampshire
Oregon
Montana
Alaska
Delaware
Response
Taxation without representation
Different tax rates for same product depending on where you buy it
Notify retailers of rate changes
Designate a single state organization to handle sales tax registrations, filings, and audits
Establish a uniform sales tax base for use throughout the state
Use destination sourcing to determine sales tax rates for out-of-state purchases (a purchase made by a consumer in California from a retailer in Ohio is taxed at the California rate, and the sales tax collected is remitted to California to fund projects and services there)
Provide free software for managing sales tax compliance, and hold retailers harmless for any errors that result from relying on state-provided systems and data
ASK: how many consider yourself a small business? Where would you draw the line?
IRS – $20 million
SBA - $30 million for “electronic shopping”
Paul Ryan – 2012 vice-presidential candidate with Mitt Romney
Justice Anthony Kennedy
Call for case to be brought forth to reexamine Quill v. North Dakota
Quill decision questionable
Congress instead of SCOTUS
NOMAD in gray
Single rate states in orange
Origin in green
In any other state, you’re doing it wrong
And there are exceptions here – if you sell apparel in Massachussetts, only the amount over $175 is taxable, the rest is exempt.
CA and TX are modified origin, they really can’t use it.
TN is current origin but is changing to destination as of July 1, so they can’t use it.