Remote Transactions Parity Act – HUGE Small Business Exemption Change – Much Worse than MFA!

To recap, the Remote Transactions Parity Act (RTPA) is the Marketplace Fairness Act (MFA) 1.1.  Same fundamental flawed and broken structure.  But now I think the RTPA is actually much worse than the MFA.

The RTPA has a Small Business Exemption (SBE), as does the MFA.  But new verbiage introduced since a March draft I saw completely destroys the SBE for a TON of businesses.

Inexplicably, the new paragraph states that you are treated the same as a business that exceeds $10 million in sales and can’t be exempt from the law if your company “utilizes an electronic marketplace for the purpose of making products or services available for sale to the public”.

This is INSANE!

So some small company who also happens to list some products on Ebay,  Amazon or Etsy now no longer qualifies for any small business exemption, no matter how small they are and will be required to bear the full regulatory burden of the RTPA 180 days after passage.  Just because they list through a marketplace.  And really, what does that newly added definition even mean in the real world?  Yes, it’s defined, but it’s a bit vague.

This is a TERRIBLE last minute addition to the bill that will dramatically affect the number of affected retailers, enrich CSPs and wipe out some smaller retailers.  I can’t believe that this hugely impactful section wasn’t in the March bill draft and has now been added as almost an afterthought.

 

” (3) ELECTRONIC MARKETPLACE.—The term ‘‘electronic marketplace’’ means a digital marketing
platform where—(A) products or services are offered for
sale by more than 1 remote seller; and (B) buyers may purchase such products or
services through a common system of financial transaction processing.”

 

In the end, RTPA will get rid of the Small Business Exemption after 3 years, leaving a huge windfall for the CSPs to touch literally every business in America.

Remote Transaction Parity Act sure has a LOT of new CSP protections

As covered in our previous Revolving Door From Government –  Part 2, we covered Taxometry and their very recent hires.

It sure was good luck that Taxometry hired former Legislative Director Mike Jerman.  Mr. Jerman was the Legislative Director for Representative Chaffetz (Utah) who by a stunning coincidence steered and/or wrote the “MFA 2.0” Remote Transaction Parity Act (RTPA) bill about to be introduced to the House by Rep. Chaffetz this coming week.  Taxometry is also located in Utah, how doubly-convenient!

So the guy who drove/wrote the new remote sales tax bill for Congress jumped to the private sector to a pending Certified Solutions Provider (CSP) firm that would profit greatly if the bill was passed.  He just started in May and the new bill is being introduced in June.  What kismet!

And it’s only a coincidence that there is a lot of new language in the RTPA bill, compared to the Marketplace Fairness Act, that seems designed to explicitly help or protect these sales tax CSPs.  It’s almost like CSPs wrote it.  Hmmm.

Some highlights of the brand new additional language in the Remote Transactions Parity Act (March draft that I’ve seen) that weren’t in the Marketplace Fairness Act:

Under MFA

States need to provide free software and a way to certify providers.

Under RTPA

Specifies states need to provide free access to all “national” CSPs – a new term/concept to RTPA.  And of course, the states need to pay the CSPs.  A Jobs act for CSPs.

Under MFA

MFA briefly covers retailer not liable for the error if a CSP makes certain errors (like calculating the tax incorrectly due to a CSP’s mistake)

Under RTPA

Additional phrase added: “unless the error or omission is the result of misleading, in-
complete, or inaccurate information provided to the certified software provider by the remote seller.”
 Lobbied for by CSPs?  It weakens the whole “no liability” aspect for retailers.  This was a problem in MFA and is even more explicit here.

Under MFA

Relieves CSPs from liability from the states if the result is due to misleading or inaccurate information provided by a remote seller.

Under RTPA

Added another relief word: Incomplete – so “incomplete” data saves the CSP from liability.

 

Completely new sections have been added to RTPA that weren’t covered at all under the MFA. Some CSP-related highlights that benefit CSPs follow:

  • Section I is a whopper of a section and is entirely new to the RTPA.  This new section covers the possibility of customers suing a retailer OR CSP for under-collected or over-collected sales tax.  So, an admission of an entirely new problem for retailers that this creates?  New lawsuit possibilities?  Or is this also yet another custom piece added to the bill to cover CSPs further.  It’s ALSO another way to help CSPs by explicitly stating in the bill that to avoid the liability, you should use a CSP which is prima facie evidence of “reasonable business practices regarding tax collection”.  Who wouldn’t want to use a CSP with that language in the bill?
  • Small Business Exemption definition changed from counting remote sales to counting all sales (not that states and CSPs aren’t planning on reducing the exemption over time anyway)
  • Yet another brand new section regarding CSPs in the RTPA that wasn’t in the MFA.  Section 3, part G of RTPA.  It’s both a jobs program for CSPs and almost union-like or tenure-like.  It limits how states can deny or revoke certification for CSPs.  The section also sets timeframes in which a CSP’s certification request must be acted on.  It’s also referenced later in definitions.
  • New Statute of Limitations of 3 years.  States may only go after CSPs (or retailers) for incorrectly collecting sales tax for the previous 3 years.

 

Revolving Door From Government – Part 2

A 2015 update for some new finds today regarding a new possible CSP – Taxometry.

I guess it’s not a total surprise when people switch from the private sector to the public side… but boy it seems to be a revolving door.  Reading the who’s who in the Streamlined Sales Tax papers, I occasionally forget if I read about them as a state employee, or as a private employee working with the states.  It seems to be a pretty cozy group.

Frankly, I find it pretty questionable “interesting” when the former Legislative Director for Congressman Jason Chaffetz (UT) for 6 years jumps ship to a new company in the process of being a new Certified Solution Provider (CSP) for the states should the Marketplace Fairness Act (MFA) or similar bill pass.

Mike Jerman:

Legislative Director for Congressman Jason Chaffetz 2009-2015
As of May 2015, Sales and Marketing for Taxometry

Congressman Chaffetz is one of the proponents who is supposed to reintroduce a slightly tweaked version of the failed MFA again this year.  I have no doubt that the new bill will be MFA at it’s core and that any “fixes” are merely cosmetic and won’t actually address the problems with the MFA’s impact on small online retailers that I’ve thoroughly covered here.

Also at this new CSP is Bruce Johnson.

“Bruce Johnson is a past chair of the Multistate Tax Commission, where he currently serves on its Executive Committee. He was the founding national co-chair of the Streamlined Sales Tax Implementing States and has served on the Executive Committee of the Governing Board. He was a member of former Governor Olene Walker’s Tax Advisory Group and was the principal draftsman of Governor Walker’s Recommendations on a Tax Structure for Utah’s Future.”

 

Amazon collecting sales tax – now up to 74% of population

Some new states added to the list, according to this Internet Retailer article.

“Once Illinois comes on board on Sunday, Amazon will collect sales tax in 24 states, including from eight of the top 10 most populated states. Ohio and Michigan are the only states in the top 10 where Amazon does not collect sales tax.

According to population estimates from the U.S. Census Bureau as of July 1, 2014, 73.8% of the United States population lives in the 24 states where Amazon will collect sales tax as of Feb. 1.”

That’s certainly WAY more coverage of the population than the so-called Streamlined states are (about 1/3 of the population).

As Amazon continues its dominance, growth and increased presence and tax collection, why do we need the mess that is the Marketplace Fairness Act/Efairness?  We don’t.

 

Cow Pie with a bow on it! – “Remote Transaction Parity Act” MFA 2.0

Again, with the names of bills that mean the exact opposite.  MFA 2.0.

First, the Marketplace Fairness Act – which would never create fairness for anyone (well covered on this blog)

Now, after yet another year of defeat, it’s time to rebrand!  Why bother to truly start over and address the House Judiciary’s fairness principles from 14 months ago or learn from your mistakes as to why this terrible bill met resistance.  Let’s put a bow on this cow pie of a bill instead!

According to this article, MFA 2.0 will be called the “Remote Transaction Parity Act”.  Which of course means it won’t have any parity between “brick and mortar” and remote sellers of any kind.  It sounds like the overall approach is unchanged and proponents have made a tweak or two for window dressing.  So they put a bow on the cow pie.

Will “brick and mortar” sellers have to:

  • Deal with 46 states tax rules?
  • 9600 tax jurisdictions?
  • Be exposed to audits from 45 more states than before?

Of course not.  So of course this bill has nothing to do with “Parity”.  The name probably focus tested well.

“I think it will be very palatable to both sides of the aisle,” Chaffetz told Tax Analysts following the meeting. “It really clarifies a number of things that people thought were wrong with the MFA. It just makes it a better bill.”

I don’t need clarification.  Frankly, I and some other opponents have forgotten more about the legal and implementation details than most proponents or legislators have ever known or imagined.  Small store owners are a detail oriented and pragmatic group who have probably done about every job in their company at some point.  WE get the details.  THEY don’t.

The entire fundamental approach to the MFA is flawed, needlessly complex and will lead to unacceptable compliance costs, burdens and audit risks.

“”How many more retail obituaries are we going to have to read before we, Congress, recognize pursuant to what the Supreme Court said in 1992 that we are the only institution that can intercede on the issue and issued us an engraved invitation to fix the problem,” Womack asked.” (Rep for Wal-mart’s district, major funder of the bill)

We will have the same number of local retail obituaries with or without this bill.  Perhaps more when smaller online retailers using the Internet to try and grow a business get wiped out by this train wreck.

“”If any small business had a concern about MFA, this will take away their concerns,” Osten said. There is language in the draft bill that would reduce the burden of audits on small businesses, Osten said.”

Horse hockey.  I call BS.  The previous MFA bill is only 8 pages.  Much of it refers to the Streamlined States document, which is hundreds of pages and is what really defines much of the law.  Audits are certainly a prime concern, but there’s just no way a tweak to the bill will remove this threat.  And audits is just one of many major, fundamental problems with the bill.

“”The new bill that Congressman Chaffetz has will indeed respond to the principles raised by Chairman Goodlatte and should respond to all of the concerns the House Republican leadership has raised about the MFA bill.””

More horse hockey.  MFA was fundamentally incompatible with the Judiciary statements.  If it were so easy to tweak MFA to address the concerns, why did proponents wait 14 months?  Because MFA was never going to pass muster.

As an added bonus, our favorite Pro-MFA huckster David Campbell of Taxcloud is in the mix yet again!  Somehow he managed to be clairvoyant and register the domain name RemoteTransactionParity.com in June, almost 6 months ago before this announcement.  It shows how cozy the CSPs, especially rent-seeking Taxcloud, are with pro-forces and legislators.  Of course, he will stand to make millions should MFA 2.0 pass.

“Is it possible that Rep Chaffetz office leaked the bill to the Certified Software providers before even letting anyone else see it? Is it possible that David Campbell and other CSPs are actually writing the bill? They sure are cozy!  And we’ve seen with our simultaneous Twitter blocking from all pro-accounts, they do work together.  Perhaps Mike Jerman (who is spearheading this legislation in Chaffetz office) should listen to all parties instead of just the party who stands to make millions if this passes.”

 

Grasping At Straws – Alibaba

There’s an article in The Hill today  about the pro-Marketplace Fairness Act proponents doing a big push on some Alibaba themed ads.  The Alliance for Main St. Fairness (Walmart, big box retail chains..) produced the spots which will be running on the news shows this week.  The Hill states:

“The ad marks the beginning of a six-figure campaign by the Alliance. The commercial will run on all of the Sunday political talk shows, and on cable television in the Washington, DC, Roanoke and Harrisonburg, Virginia, media markets, according to a spokesman.”

Hmm.. Roanoke, home of the House Judiciary Chair Goodlatte.  Congressman who published a set of fairness guidelines 14 months ago that paused any consideration of the unfair MFA.

Here’s the main gist – quoted from the ad.

““Thanks to the online sales tax loophole this Chinese company will decimate our local retailers. Unless Congress ends special tax treatment for Alibaba and other online giants, Main Street will never look the same,” the narrator states.”

Which of course it utterly false.  For all of the reasons I won’t rehash in Myth of a Level Playing Field & Myth of a Level Field, Part 2 MFA won’t bring a level playing field as it affects so few states and leaves a large percentage of sellers unaffected by MFA.

Above and beyond those reasons, foreign sellers will NOT be affected at all by MFA.

  • U.S. Sellers over the exemption level will bear all of the compliance costs, burdens and audit risks.
  • A Chinese seller shipping into the U.S. will NOT.
  • A Chinese (or other foreign seller) will not collect & remit sales tax

What is this really about?  Desperation.  Throwing whatever proponents think will help pass this bill this year, their last & best chance for a while.  The last sentence of the Hill article really sums up the desperation, trickery and why it matters to proponents:

 “Backers hoped to attach the legislation to a less controversial bill that would extend a freeze on taxes on Internet access. They have admitted that it could be a major setback if the proposal doesn’t become law this year.

As I’ve said before, proponents seem willing to say or do almost anything to pass this bill for big box retail.  This website has documented the cognitive dissonance, the misstatements and the flat out lies.  This is hopefully the last gasp for this bill for a while (knock on wood).

 

33% – Myth of a Level Playing Field Part 2

I’ve covered the myth of a level playing field pretty extensively already in a detailed post.  In short, the Marketplace Fairness Act won’t create the mythical “level playing field” for the perhaps even more mythical “Main Street small businesses”.  Have you looked at Main Street lately?  More large chains than anything these days.  They already collect tax in almost all states.

From that post:

Why Efairness/MFA undeniably won’t create a level playing field:

  •  $1 Million Small Business Exemption – there will always be a steady stream of smaller retailers with products for sale without tax.
  • Cheaters – Many people selling through Amazon or Ebay that should collect sales tax don’t.  This won’t change.
  • Foreign Sellers – Will not be bound by the MFA.  I’m seeing more foreign sellers through Amazon than ever, especially from Japan & China.
  •  “99% of businesses won’t be affected by MFA”   What’s so funny is the cognitive dissonance of proponents who try and minimize the impact of the MFA on businesses.    If actually true, it means only 1% of the stores would start collecting sales tax, so that won’t help “Main Street” businesses at all.

Here’s the other key reason that dawned on me more recently when replying to Taxcloud’s ridiculous “Position Pivot” letter to Speaker Boehner.

  • The only states that will be able to collect sales tax are the streamlined member states.
  • Most big states are NOT part of the streamlined group and haven’t been lining up to join
  • Streamlined states only hold 33% of the US population.  2/3 of the population live in non-streamlined states & will be unaffected by MFA.  1/3 of the population would drive this terrible legislation upon all states

To change state laws to join the Streamlined States group is a BIG deal.  This isn’t checking a box, it’s the state’s legislators agreeing to significantly change their laws and perhaps their state constitution to join.  Even if states wish to go this route, it’s going to take a very long time.

The other route for states to exert taxing authority on remote sellers through the MFA is by achieving certain simplification standards which also would require state legislation, new laws, perhaps a state constitution amendment and would also take a long time.

And some states would not be able or interested to significantly change their laws to accommodate the MFA and wouldn’t be able to collect from remote sellers.

So on top of ALL the other reasons why the MFA AKA Efairness won’t actually provide fairness anyway, this now shows that the law will only apply to 1/3 of our US population anyway.

One more reason why the so-called Efairness is just a big-box retail pushed bill won’t achieve it’s goals anyway.  MFA is Terrible legislation that should die.

FYI, Craig Johnson in a streamlined states interview does confirm this 33% figure himself.

Taxcloud Letter to Speaker Boehner (11/18/14) – A Rebuttal

Wow, what a steaming pile of Pivot.

In case you haven’t heard the term, “pivoting” is what you do when your idea isn’t working.  It’s mostly associated with start-ups who realize their ideas/business model isn’t working, so they “pivot” to another.  It’s mostly a euphemism and frequently used as a mocking put down when the pivot clearly is something that is such a 180 degree turn from their previous direction.  Sometimes pivots work, many times they don’t.  More often than not, it’s a sign of desperation.

So what is the Marketplace Fairness act about?

The Marketplace Fairness Act is about a “Level Playing Field” & Fairness

The Marketplace Fairness Act is about Saving Main St & Local Businesses

The Marketplace Fairness Act is about States Rights

The Marketplace Fairness Act is about Free Markets

The Marketplace Fairness Act is about Billions of Tax Dollars not being collected 

“Continued inaction by Congress on the matter of online sales tax collection leaves online retailers vulnerable and unprotected from an increasing onslaught of inconsistent and difficult-to-manage state laws”

So now Taxcloud has COMPLETELY changed their pitch for the big-box retail-funded MFA – and they’re doing it for us: Online Retailers.

Wow, that’s sure nice of them.  Especially since I’ve taken them to task repeatedly for lying misstating facts, misrepresenting their capabilities to elected officials and any one who will listen…over and over again.  Way more than any other of the 6 Certified Service Providers (CSP) who can process sales tax with the streamlined states.  And of course, it’s utter nonsense.  Their support of the MFA is to receive a windfall of dollars from the states if it passes.

So lets go through the letter

“We understand the anxieties of those opposed to the proposed online sales tax legislation because we used to share their concerns about complexity, compliance costs, and audit risks. “

Yes, you USED to share them, but now your sell tax services, so there’s no fear for you anymore.  You’re not an online retailer.

More importantly, Taxcloud has repeatedly overstated their solution’s abilities and understated actual, real complexity, compliance costs and audit risks that are 45 times worse if MFA passes.  I go from 1 possible state audit to 46 states that can audit me.

“In fact, our founders all worked at e-commerce companies previously, where we endured just such difficulties with sales tax compliance.”

Really?  Not to be nitpicky, but I only see 1 of the founders with what I’d consider any retail ecommerce experience.

“But as we’ve discovered, technology has given us the tools to put these concerns to rest.”

But as before, this is just not true.  Marketing speak.  Plenty of articles on this blog regarding exact and detailed concerns with all of the above.  More importantly, Taxcloud doesn’t support our setup, order processing software and third party sales anyway… so even if they sold this unicorn powder, it’s irrelevant if they don’t support our setup.

Then, a few half-truths at best regarding what their services include:

“responds to audit inquiries, and even provides indemnification in the unlikely event of errors”

We’ve covered this in other audit-related posts, but Taxcloud might provide some initial data, but when a state audits you, they require a great deal of information (in my 2 audits experience) that Taxcloud does not possess.  Details about internal purchases, copies of Federal tax returns.. a variety of documentation.  This also would only be for level-1 sellers where Taxcloud provides ALL tax processing services – currently impossible for most.  So you’d be a level 4 seller – and the states would go to YOU for ALL audit info.

And the indemnification is extremely limited, it’s only if Taxcloud makes an error or if the states gave bad tax rate data to Taxcloud.  It doesn’t cover anything else at all.  Some tech glitch on your end?  Not covered.  One of my 5000+ items misclassified? Not covered.

“Our service is free because we are a Certified Service Provider (CSP), meaning that we have been hired by the SSUTA states”

Free for an ecommerce site that’s simple enough to be supported.  We’re not.  We would become unpaid tax collectors and even pay credit card fees on the newly collected taxes and get nothing.  Taxcloud makes 8% of the sales tax.

 “Our point is this: sales tax automation technologies are available right now and work very well. The argument that the technology does not exist to easily handle remote collection of sales taxes is simply without merit—it’s nothing but an excuse for unwarranted delay.”

Let’s take a trip down memory lane on this one.  Taxcloud has repeatedly dramatically overstated what they can do and the state of their capabilities and supported carts while making these exact same statements for the record.  Some in our group have called them lies, I’ll let the reader decide.

TaxCloud – 2010 Statements vs. Capabilities

Summary:

  • Rosy comments 3 years ago about ease sellers would have handling compliance
  • Recommended $100,000 small business exemption but only because he couldn’t offer zero exemptions
  • At that time in 2010, Taxcloud was certified only 2 months earlier
  • Taxcloud only supported a small handful of shopping carts (6 carts) a year after this paper.  Six!!
  • Taxcloud didn’t and doesn’t support the 3 platforms they identify as the largest (Ebay, Amazon, Yahoo)
  • Taxcloud still has significant gaps in even the shopping carts and platforms supported.
  • Let others figure out how to implement it – Just pass the bill!

Taxcloud: “People also used to say that the world was flat – but that did not make it true.”

  • Made demonstrably false claims about their capabilities while supporting just 1/10 top ten shopping carts in a letter to the Governor of Maine in 2012.

“Any retailer that uses an online “shopping cart” or order management system can register with our
service and be ready to collect sales tax in 20 minutes (or less), no matter how small they are.”

Nope, utter rubbish, AKA a lie.  If you want to read more, Taxcloud has their own category here.

Back to the letter

“And as long as Congress fails to act on the matter, online retailers face growing confusion and vulnerabilities in the face of rapidly changing state laws. California, New York, Pennsylvania, Oklahoma, Texas, Colorado, and many more states have been advancing variously constructed laws and administrative stratagems to require sales tax collection by remote retailers, who are ill-equipped to sort through such demands or judge their legitimacy. As Congress continues to refuse to act, states are drawing the conclusion that they are on their own, and the trend of singular state actions continues and is likely to intensify.”

So passing the horribly flawed MFA is just to help save us?  “We destroyed the village to save it” kind of thing?  Just because some states feel like they can pass a law that is unconstitutional and will never pass muster, that’s no excuse to try and ram through this terrible bill.  Those kinds of issues are pretty low on most retailers’ radar and generally have been overturned.

More importantly, MFA does nothing to solve this!

  • MFA only applies to 24 SSUTA member states and frankly, many of them are smaller states.  Update: Only 33% of U.S. population covered by Streamlined states (source Wikipedia/ 2010 US Census).

Many key states like California, New York, Pennsylvania, Texas and Colorado are NOT streamlined states and would not be able to collect tax under MFA without major changes to their laws, which would require legislation and likely take years to happen, IF they wanted to.  So MFA doesn’t even solve this issue for 5 of 6 states he lists.   

  • MFA only applies to businesses with $1 million or more in remote sales.  Smaller?  MFA does nothing to solve this for you!

 “The amount of uncertainty around sales tax law is unsustainable”

No, not really.  We’re quite OK without MFA, thanks.

“It is especially burdensome for retailers who sell through multiple channels, from online to mail order to phone”

Which are things Taxcloud is unable to support – Major cognitive dissonance here.  None of these things can be supported by Taxcloud for us, or anyone that we know.  They don’t support Amazon, Ebay, our order processing software or mail order catalog’s concerns.

“We urge you to meet your responsibility to online as well as local businesses by ensuring e-fairness legislation is enacted this year. This very achievable step would provide welcome relief to small businesses across the country.”

Relief how?  Because it used to be about fairness and a level playing field.  This “fairness” is of course a myth when proponents claim anywhere from 96% to 99% won’t be affected by the MFA.  Which also means the relief wouldn’t happen at all with this law.   Why relief won’t happen:

  • Smaller retailers will still not collect sales tax, Main St. brick and mortars will have gained nothing.
  • Online retailers below $1 million would not be spared this “unsustainable sales tax environment” since they’d be exempt from the MFA
  • Online retailers over $1 million would not be spared this “unsustainable sales tax environment” either, since most important states wouldn’t be affected by MFA for a very long time.
  • Online retailers over $1 million WOULD be hammered by new compliance obligations, compliance costs, audit risks and trying to comply with a massive state overreach for SSUTA states almost immediately upon passage.
  • Taxcloud would make a ton of money.  Which is why they continue to spin out new and ridiculous (sometimes false) statements as to why Congress should pass MFA so he can finally cash in.

 

If Congress must and is really serious about the issue, the Judiciary released a set of principles for a fair method of collecting taxes.  This was released in October 2013 (13 months or so ago at the time of this writing) and proponents have done absolutely nothing with them.  The only way forward to meet these fairness principles is to scrap MFA completely and start over and with some meaningful and REAL simplification, like 1 sales tax rate per state for remote collection.  But then you won’t need someone like Taxcloud.

Marketplace Fairness Act Myth: “Level Playing Field”

One of the focus group-tested themes by the pro-Marketplace Fairness Act groups is that they are pushing for a “level playing field”.  How noble of Wal-mart, Best Buy, Amazon and others to push for small businesses to be on a level playing field.   Which of course, is nonsense on many levels.

Why Efairness/MFA undeniably won’t create a level playing field:

  •  $1 Million Small Business Exemption – there will always be a steady stream of smaller retailers with products for sale without tax.
  • Cheaters – Many people selling through Amazon or Ebay that should collect sales tax don’t.  This won’t change.
  • Foreign Sellers – Will not be bound by the MFA.  I’m seeing more foreign sellers through Amazon than ever, especially from Japan & China.
  •  “99% of businesses won’t be affected by MFA”   What’s so funny is the cognitive dissonance of proponents who try and minimize the impact of the MFA on businesses.    If actually true, it means only 1% of the stores would start collecting sales tax, so that won’t help “Main Street” businesses at all.

The flip side of a level playing field is the tired argument that MFA would equalize online and brick and mortar retailers.  Phrases like “online-only sellers should collect sales tax from dollar 1, just like he must”.  Again, nonsense.

  • Online retailers do collect sales tax “from dollar 1” where they have a physical presence, just like traditional retailers.
  • MFA would bury smaller online retailers under a blizzard of audits and collection burdens that don’t exist offline
  • Can a small brick and mortar face audits and compliance costs for 46 states?  No.
  • Can a small brick and mortar be an unpaid tax collector for 46 states?  No.

So get over this rubbish that the Marketplace Fairness Act has anything to do with fairness.  It absolutely doesn’t.  Nor do Wal-mart and the other supporters care.  It’s just the shameless talking points to evoke an emotional response to an issue, to paper over horribly designed legislation that won’t actually do anything for fairness anyway.

UPDATE: Part 2 covers why the MFA is even LESS able to creae a level playing field.  Only 33% of the population lives in streamlined states that will be affected by MFA.  2/3 of the US doesn’t.

 

Seattle Times editorial complaining about Speaker Boehner & MFA

“Editorial: If John Boehner kills the Marketplace Fairness Act, it would hurt Washington state”

“U.S. House Speaker John Boehner’spromise this week to kill the Marketplace Fairness Act is a kick in the gut to Washington state.

The measure would empower all states to collect sales taxes for online transactions from residents who make purchases from out-of-state companies.”

False.  Washington already has the ability to collect use tax from its citizens.  A new law is not needed.  Political will is needed.  If you want the money that badly, make the unpopular choice: educate and enforce existing use tax laws.

“Here in Washington, state revenue officials estimate the act would funnel $217 million in new revenue for local municipalities and $478 million for the state in the 2015-2017 biennium. The $695 million total would rise to $889 million by 2019-2021.”

Unlikely.  States cling to these inflated numbers from years ago that have been shown to have been wildly overstated.

“This additional revenue is important for a state that doesn’t levy an income tax and relies predominantly on retail sales, property and business and occupation taxes for its funding.”

Feel free to change that flawed option on your citizens if it’s not serving your state’s needs.  More importantly, Washington DOR taxable sales reports show strong growth in sales tax revenue, from 5% to 7%.  Is it ever enough?

Q2 2014 30,973,320,923 almost 7% growth year over year – most recent figure available
Q2 2013 $29,025,169,986

2013 annual 117,200,523,189 More than 7% growth over 2012
2012 annual 109,053,732,448 More than 5% growth over 2011
2011 annual 103,740,825,097

“But Boehner has consistently expressed concerns about the bill, aligning himself with the anti-tax fervor that has increasingly transfixed congressional Republicans.”

No, he’s thoughtfully holding off on the MFA.  Why do supporters need to pull circus stunts like trying to attach the legislation to other popular legislation? Or trying to cram it through in a lame duck session? It’s because the Marketplace Fairness Act is deeply flawed legislation that according to Taxcloud (1/6 certified tax providers if the MFA passes) could ensnare up to 3.5 million retailers in compliance costs and audit risks from 45 more states.

And why have proponents not done anything in the last 13 months since the House Judiciary came out with its principles regarding what would constitute a fair and balanced approach? Proponents don’t care. Most of the money is coming from big box retailers who would be happy to wound or crush smaller online rivals with this bill.

How about focusing on fixing the very real and serious flaws in the MFA. Then maybe you wouldn’t have to pull legislative stunts to try and pass it.