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Legislation passed by the U.S. Senate on May 6, 2013 would impose sales tax collection obligations on retailers with no physical presence in a state but would not provide a needed income tax safe harbor. 

In what may prove to be one of its most bi-partisan moments in recent years, the U.S. Senate passed S. 743 (The Marketplace Fairness Act of 2013) by a large margin: 69 – 27. The Bill would require remote sellers with more than $1 million in total sales to collect sales taxes in states that adopt sales tax simplification measures. These simplification measures require one-stop tax compliance, one-stop auditing, standardization of what is subject to tax, and 90-day notice of rate changes. 

Logic tells us that virtually every state will adopt these sales tax simplification measures, at least for remote sellers. This is a development that over time may lead to sales tax simplification for all sellers.    
Continue Reading Marketplace Fairness Act of 2013: Where Is The Income Tax Safe Harbor?

Any retailer, even one operating in just one locality, knows that sales tax collection can quickly become complicated. Different goods and services may be subject to different rates or exempt from tax, and some purchasers may be exempt. Operating in multiple localities with different regimes only compounds the problem.

As if it were not enough to worry about audits by local tax authorities, companies that file reports with the Securities and Exchange Commission may also need to be concerned with the adequacy of their sales tax compliance controls.Continue Reading How’s Your Sales Tax Software? The SEC May Be Interested

There have been several recent developments in the continuing efforts by states to make out-of-state Internet retailers collect and remit sales taxes.

Brick-and-mortar retailers are required to collect sales taxes. However, where an out-of-state Internet seller ships goods into the state but has no other in-state contacts, the transaction is not subject to sales tax. The recipient of the goods is supposed to pay a use tax in the same amount. Commercial enterprises are subject to state sales and use tax audits and generally comply, but individual purchasers seldom do. Brick-and-mortar retailers believe that this gives Internet retailers an unfair advantage. Many cash-strapped states would like to require the Internet sellers to collect and remit the use tax, rather than relying on their own residents to comply.Continue Reading “Amazon” Sales Tax Developments