In a Seattle Times Op-Ed today, Peter Ollodart throws up his hands at the prospect of filing sales tax returns in 45 states, and consequently is lobbying against the Marketplace Fairness Act if Congress.
If he really had to do that, I’d agree with him. Of course, under the structure of the bill in Congress he won’t have to. All versions of the bill require that the states pay for software services that would be available free to the business collecting the tax. He would sign up with one of the providers and they would file all the returns for him.
Washington State has been a leader in trying to simplify collection of sales tax nationally for many years because we are uniquely dependent on sales tax revenues as a state, having no income or capital gains tax. The bill we passed almost a decade ago to enter into the multi-state agreement (more than half of the states collecting sales tax are members) was supported by a wide array of folks, including the Association of Washington Business and legislators of both parties because we recognized that the growth of Internet sales was putting pressure on both the state budget and on local businesses that find it hard to compete with a seller who has an almost 10% price advantage.
Good tax policy has low rates that are applied evenly so as not to affect business decisions. It makes no sense that tax policy alone makes some businesses do well at the expense of others, and we work hard to have taxes apply evenly as the world changes. We made a big change in how telecom taxes work this year – the last time the code in that area had been updated was in 1983. Back then the service was still a monopoly and nobody had cell phones.
The Markeplace Fairness Act is a reasonably well thought-through approach to simplify how sales taxes work a the national level and would even the playing field for our local businesses that have to compete with Internet sales on which there is no sales tax collected. The Seattle Times editorial board agrees:
“Streamlined member states, like Washington, will provide services like TaxCloud and Avalera. This is over half the states that have sales tax. (24 current members.) They have one shared solution.”
As covered, no states won’t and they don’t have a shared solution that they will all use. The MFA doesn’t require it and I’m sure 24 states won’t somehow collude and pick one CSP to use.
Streamlined member states, like Washington, will provide services like TaxCloud and Avalera. This is over half the states that have sales tax. (24 current members.) They have one shared solution.
Non-SSUTA states will have more hurdles to jump through. My guess is that they will contract with the existing providers to cover their states, as otherwise it will reduce their receipts pretty significantly. I personally would prefer that Congress require states to be SSUTA members in order to require collection, but I’m not in Congress so I can’t affect the bill.
It’s not cost-effective to enforce the use tax law regardless of consumer education. It would require NSA-like communication intercepts. Some specific types of transaction have been targeted in the past, including high-end art sales, and that has had a salutary effect on those specific transaction, but not a general one.
Frankly Representive Ross, you quite simply don’t understand what the Marketplace Fairness Act does and does not do. While I appreciated that you commented on the original editorial, your comments were demonstrably false (I replied). And so is what you’re saying here.
What you say: “If he really had to do that, I’d agree with him. Of course, under the structure of the bill in Congress he won’t have to. All versions of the bill require that the states pay for software services that would be available free to the business collecting the tax. He would sign up with one of the providers and they would file all the returns for him.”
Reality: MFA does NOT require the states to pay for software services.
States are required under section 2 to provide:
“software free of charge for remote sellers that calculates sales and use taxes due on each transaction at the time the transaction is completed, that files sales and use tax returns, and that is updated to reflect rate changes”
What this means is the state has to provide some kind of software. The state could work with a certified provider, it could work with someone else or it could write its own software. And EVERY state can pick it’s own solution as long as it meets that criteria. We can’t integrate 46 solutions. No one can.
Also in section 2: MFA covers that states are required to have a “single sales and use tax return to be used by remote sellers to be filed with the single entity responsible for tax administration”. THIS IS PER STATE.
So your assertion right off the bat is completely incorrect. And all of this is in the 12-page MFA bill, not buried in the SSUTA agreement. Yes, there are up to 46 states to file and no, we don’t sign up for someone to do it for us for free.
The only way we can simplify it some, is to PAY someone like Avalara who can handle some aspects of our operation, but even they can not handle our fairly simple setup. The shopping cart is barely the tip of the iceberg regarding sales tax. The order processing software we use is actually more important, that’s where we charge people, may refund an order, or even partially refund an order. Or refund, but not their shipping charge upon return of product. All of these things need to be handled and states handle these refund scenarios differently and are also even time-dependent for some states.
And they can’t handle our Amazon orders, which we also sell through.
So will you agree with Peter now? Because your above statement is incorrect. MFA has a lot of fatal flaws that myself, Peter and other retailers are trying to address. Looking forward to you swapping sides on this issue and pushing for TRUE simplification and true fairness to the process. Bring that to the table, I’m on board. But it’s not there.
If you want more details about what we as store owners would generally agree is a fair approach, it’s on emainstreet.org.
No Mr. Hunter, there is only ONE version of the Bill passed so far, and that is S743, passed in the Senate only. It requires States to offer free software. Current ‘free’ software offered by by SSUTA certified providers only cover 30 of the top 300 shopping carts, offer zero support for non-electric sales (catalog sales w paper checks), is not automated for multi channel sellers, and does nothing to prevent audit risks not covered in the bill.
I have brought these points up before, yet you choose to ignore them.
WA State has one of the worse Sales Tax law in the US, as it is totally destination based. It is a bookkeeping nightmare for eBay WA based sellers, yet WA DOR has no software to help with this problem.
And just how will WAs ‘free’ software talk nice to CAs ‘free’ software? There is no internal common software coding for taxibility items. The Tax program from Avalara, Vertex, and Tax Cloud all have different systems.
You keep bringing up the ‘fairness’ issue, yet you (and your B&M buddies that believe the lie) only think of your own back yard. Fact is B&Ms would rather blame the internet rather than a poor sales staff, lack of selection of product, or the WalMart next door (who is pumping Millions in the lobby effort) that store 30% of a B&Ms business.
WA has Use Tax law know. Maybe you can explain to the voters why WA DOR has not done their job educating the public that such law exists, nor bothered to enforce same. They have many tools in the kit to do so, but they also know it is not a voter popular subject, and you would like to get re-elected, so pass along the 17% compliance costs, and the dirty work, to small business …. all part of the plan from Alliance for Main Street Fairness … the lobby arm of WalMart.