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.”

 

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.”

 

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.

Taxcloud abusing DMCA takedowns – The video they don’t want you to see

Taxcloud, and/or proponents of the Marketplace Fairness Act must be very embarrassed about the contents of their business pitch video.  This 90 second video sums up their company, their business plan and how large the market opportunity is.  Proponents have paid for studies with laughably low estimates of the number of retailers that would be ensnared by the Marketplace Fairness Act.  They’ve consistently soft pedaled how many would actually be affected.  I’ve heard numbers in the low hundreds to a thousand or so be routinely thrown around as fact.  You know they’ve been using this same lie with legislators as well.

Their video states the market is 350,000 to 3.5 million retailers.  Oops!  That doesn’t fit the narrative of less than 1000 at all.

R. David L. Campbell is a founder and CEO of Fedtax, AKA Taxcloud.  He has been attempting to quash a video from being shown through this site.  He has fired off a number of DMCA takedown requests against my 19 second snippet of the video, which is clearly fair use in this context.   The video has been pulled from Youtube and Vimeo.  His takedown requests of this short excerpt are illegal and an attempt to silence a critic and hide an embarrassing truth.

What’s amusing, is that this video was put on Vimeo by Taxcloud and has been publicly viewable for a very long time.  It only became an issue when my article called out what I feel is a closer estimate to how many retailers will be harmed by this and showed the same video.

In case you missed it, here’s the relevant section of their video that they REALLY don’t want you to see (at least, anymore):

 

 

 

 

Pinned Post – MFA’s (AKA MITFA) Vast Impact

A couple of our blog post that summarize the vast, and perhaps unintended reach of the Marketplace Fairness Act on businesses.

First, a post about how wholesalers, manufacturers and other non-retailers will be affected by new compliance burdens and audit risks (and if they sell retail, they’ll be just as affected as us)

The MFA impact on Manufacturers, Distributors & Wholesalers – A Huge Swath of the Economy Will Be Affected

Second, a post regarding Taxcloud’s statement regarding the number of businesses that will be impacted by this legislation – It’s a HUGE number and way more than the proponents have tried to sell in the past.  Ridiculous numbers like 1000 retailers.

Taxcloud is 1 of 6 Certified Service Providers for the Streamlined States and a huge proponent of the bill, since they’d make many millions of dollars if MITFA or Marketplace Fairness Act passed.

Taxcloud Video – Up to 3.5 Million Retailers Will Be Impacted by MFA/MITFA

Taxcloud Video – Up to 3.5 Million Retailers Will Be Impacted by MFA/MITFA

How many businesses might be ensnared by the Marketplace Fairness Act/MITFA?  Way more than most might guess.

350,000 – 3,500,000 retailers is their market – according to this elevator pitch 90 second video regarding Taxcloud’s business prospects from October 2011.  Taxcloud is 1 of 6 certified service providers (CSPs) who will see a windfall in new business if the MFA/MITFA passes.

Actually the phrase was “350,000 to 3.5 million retailers will be impacted by the new law”.  And “suggesting an opportunity of 1.3 billion dollars for Fedtax.”

They’re embarrassed enough by this FAIR USE 19 second snippet of the whole video that they’ve repeatedly filed frivolous DMCA notices to pull down the video.  This copy is in Iceland – good luck with taking this one down.  Transcript down below too.

US Vimeo – back up.

 

I doubt this includes true wholesaler/manufacturers as someone who only has exempt transactions wouldn’t be someone that would generate revenues for them.  More businesses might be impacted even than this number.  Not sure if this estimate includes a $1 million dollar small business exemption or a lower one – or a much lower one like the pro-side plans on moving to anyway down the road.  Boil the frog slowly!

So is it puffery?  The real truth about how many would be impacted by the Marketplace Fairness Act’s unprecedented expansion of states powers to reach across their borders?  Somewhere in-between?   I hope not to find out.

Proponents have tried to soft pedal with completely unbelievably small numbers how many will be affected by the Marketplace Fairness Act.   I believe these numbers have embarrassed the pro-side and they’re freaking out.  Sadly, I do believe the numbers.

 

Taxcloud Pitch – UPDATE: TAXCLOUD PULLED THE VIDEO (10/25/14).  I’ll get a copy up soon and the transcript is below.

Update 2: 11/1/2014 – Taxcloud filed a DMCA takedown notice against the video.  I hope to have it up very shortly and won’t be silenced by the attempts. Transcript below anyway.

Update 3: 11/1/2014 – Created new video – Less than 20 second excerpt of the video that specifically leads up to the topic and states the number.  This video is absolutely covered by fair use.  §512(f) provides very severe penalties for those who knowingly file false DMCA notices. See also Open Policy Group v. Diebold.

Update 4: 11/2/14 – and of course, Fedtax/Taxcloud again failed a DMCA claim, clearly frivolous.

 

Addendum: transcript of the whole video

David: You would have to be living under a rock to not have noticed the state of California dispute with Amazon.com about collecting sales tax on online purchases and the fight is underway in other states as well.

Daniela: And this fight is underway in other states as well even in Connecticut and the numbers add up quickly over 23 billion dollars.

Joan: Over 23 billion dollars uncollected every year. Online retailers don’t collect sales tax today because 44 years ago the Supreme Court said it was too difficult.

Carl: Too difficult for remote retailers then mailer catalogs to keep track of every jurisdiction across the country.

Erin: No one would disagree that a lot has changed since then. That’s where Tax Cloud comes in.

Leslie: TaxCloud calculates sales tax for every address.

Paul: Every address across the country in under 13 milliseconds. And we also prepare and submit returns, submit proceeds and even…

Chris: Even respond to audits. And we do all of this for free.

Erin: Free.

Joan: Free.

Chris: We can offer TaxCloud for free for two reasons. One, we are paid by the states to provide the service and two, we have an extremely low operating cost made possible by our cloud computing infrastructure.

David: Now the fight in California has moved to Washington, DC.

Paul: Federal legislation has been introduced that would compel online retailers to collect sales tax.

Joan: Just like local retailers have to do. Between 350,000….

Daniela: … and 3.5 million retailers will be impacted by the new law suggesting in the annual opportunity of over 1.3 billion dollars for Fed Tax.

Other locations:

Also on Vimeo (now pulled via DMCA too)

Locally

Accounting Web Article – Interesting Quotes

In a recent article in AccountingWeb “New Bill May Change the Sales Tax System” there’s a few interesting comments/whoppers.

First, a whopper from the founder of Exactor, one of the 6 CSPs that will make millions if the Marketplace Fairness Act passes.

“”E-commerce has reached maturity and there’s no reason we should treat it as some sort of start-up that needs additional incentives,” says Barsade, an attorney who specializes in taxation and technology.”

Actually, no special treatment exists now.    Due to well established law and 2 Supreme Court decisions, states can’t impose collection responsibilities on companies that don’t have presence in their state (Nexus).  The implication that E-commerce is receiving special incentives is completely false.  This has been the case for many decades with catalogs and other remote sellers.  MFA would dramatically change existing law, Federalism and the ability of states to reach across their borders and impose their rules on a business that has no presence and no representation.

“And for CPAs and tax attorneys, the legislation would expand their scope of business and be a business aid, he says. “It will insert a level of certainty and sanity to the environment.””

Great!  Legislation that will increase business for CPAs and tax attorneys – that doesn’t sound scary for affected remote retailers at all!

Self Serving Post by Exactor – Phew it’s easy!

It actually is easy, because they don’t support our setup (and ours isn’t very exotic at all).  Voila!  Problem not solved.

(Update: Exactor confirmed no “plug-in” available for our shopping cart which powers tens of thousands of e-commerce sites)

This new Wired Innovation Insights post is a press release masquerading as insight.

I’m getting deja vu a bit on this – but thank heavens the founder and President of a tax company and CSP states that it’s easy to comply with the Marketplace Fairness Act.  It’s just a happy convenience that his company will make millions of dollars on that 8% of sales tax collected, while we become unpaid tax agents for 46 states.

Similar to an Avalara post early on this the history of this blog – is it easy?  Or hard?

According to the blog post, it’s easy!

“Since then, innovators have made cost-efficient, automated solutions to address this burden. Those who use the “undue burden rationale” as justification for opposing sales taxes on ecommerce are either still living in 1992, or they are just trying to take advantage of the legal uncertainties that emerged from the rapid growth of the Internet. “

Nice false choice.  We’re either clueless idiots or cheats.  BTW, there is no “legal uncertainty”.  If you’re a small business located in one state and you sell online to a customer in another you don’t need to collect that states use tax on behalf of that state, if one exists.  He continues to dig:

“An online merchant selling in all 10,000 jurisdictions can comply with sales taxes just as easily as a brick-and-mortar business selling in one jurisdiction.”

BS.  Horse hockey.  (I cleaned up the first word I wrote down)  Can I be more clear?  A huge whopper.  Read any/all of the posts on this site for the whole range of complexities, costs, audit concerns… Total BS.

“Ecommerce businesses exist in the physical world and benefit from taxpayer funding. Without roads, postal systems, governments, telephone wires and fiber optic cables, Amazon is not much of a business.”

Last I checked, e-commerce sites and brick & mortars who also sell online are everywhere.  Gas taxes are paid, so is postage, local taxes… by businesses and individuals.  And Amazon has ramped up their physical presence so much, they’re collecting sales tax for about 70% of the population so far.

“If the lobbying dollars shelled out by Amazon are any indication, they have representation. Now it’s time for taxation.”

Pot calling kettle black?  It’s fairly easy to see where the vast majority of the lobbying dollars comes from on the bill.  It’s almost entirely pro-MFA and paid for by Wal-mart and other big box retailers who are flooding Washington with dollars to pass a bill sponsored by Wal-mart Womack – coincidentally the representative for Wal-mart’s home offices.  And Amazon supports the MFA.  The statement above is both clueless and incorrect.

Or… Is it hard?

Fox Business piece November 2013

Let’s take a look at their website:

It’s not a good sign when “simple” requires a suite.  (Or when I try and look at a “satisfied client” account and they apparently went out of business)

Exacto-Calc

Exacto-File

Exacto-Trac.. and more.

Let’s look just at Exacto Calc.

“The EXACTOCALC module can be easily and seamlessly integrated into any business and transaction platform where real time calculation is required, eCommerce shopping carts, accounting programs, ERP systems. Exactor’s automated wizards provide automated integration into many systems, and its SDK provides easy integration into more customized environments.”

An SDK is lovely and all, but how many small businesses have the ability to handle this, or the costs of this custom programming work?  Virtually none.  I don’t, and I’m reasonably technical.  And some systems just can’t connect.

“The plug-in wizards work just like any other plug-in that you may have installed with any windows based software. You will save the plug-in to your computer, and then double click on it. The wizard will then automatically install the files and load the Exactor module. Once installed, the user will need to configure the module (for example adding the Exactor account information, mapping their products). A detailed User Guide is available to walk you through the process of installing and using each plug-in.”

That doesn’t sound particularly easy.  Far more importantly, it would not appear to support our hosted shopping cart.  The cart is the tip of the sales tax iceberg and it doesn’t appear to even support that.  Or, our order processing software.  Or our phone orders.  Or our Amazon sales.  Or any other channel.  And why do I need a detailed user guide?  And it sounds like I’ll have to get cracking on mapping my products, that sounds time consuming.  What if I don’t classify a product correctly, who is responsible in an audit in the newly added 45 states.  Why I am, of course.

More on their SDK makes it sound even easier.

“Briefly, the basic concept is that the merchant system calls out to our system to post sales transactions and get back the tax amounts. The method of communication is a simple HTTP POST request, where you send an XML payload (using the Exactor XML schema) containing the transaction data and receive an XML response that contains the tax data. At the end of each period, we automatically generate the returns for all of the states where there are obligations. You can have multiple points of integration where Exactor touches the transaction, such as at the order management system or the Shopping Cart level; the system Invoice level, or bulk uploads etc.”

Yet again, another CSP pushing the Marketplace Fairness Act with hypothetical processes that make all this as easy as clicking a button.  It’s still false for almost all who would be affected by the MFA.