Fact Check on MFC’s “Heritage Continues to Mislead on MFA” 6-25-13 letter

“There they go again….another day and another misleading attack from the Heritage
Foundation on the Marketplace Fairness Act.
In a new blog post , Heritage repeats the misleading and widely discredited claims that
businesses with more than $1 million in remote sales will be subject to out-of-state audits
and will be forced to comply with roughly 10,000 different state and local tax rates.

Yet, just two days earlier, at a press conference sponsored by the National Governors
Association, several small business owners outlined how they already successfully use
existing software that instantly calculates every state and local sales tax around the country
with no additional costs or burdens to their companies.”

These paragraphs are comparing apples and oranges.  Nothing in the second paragraph dispute the assertions in the first paragraph.  Unfortunately, at this National Governors Association dog and pony show, there are no details whatsoever as to what this software did, how it work, what systems it worked with… Frankly, we call….nonsense.  If you think it’s easy, you simply don’t understand the problem.  Or you’re paid to make it sound easy.

And again, we’ve already covered the audit assertion.  The MFA explicitly defines a single audit source is allowed per state.   From that post:

Audit Risk?!  PLENTY.  Nothing in the MFA meaningfully reduces audit risk.  The only language reducing the risk is if the software provided by the state miscalculates the tax due.  That’s the only safe harbor the MFA offers in section 2g “Relieve remote sellers and certified software providers from liability to the State or locality for incorrect collection, remittance, or noncollection of sales and use taxes, including any penalties or interest, if the liability is the result of incorrect information or software provided by the State.”

MFA actually CONFIRMS one of the worst parts of the MFA’s audit risk.  Perhaps the MFC should read it sometime.  Section 2a requires that audits be limited to a single entity PER STATE “a single audit of a remote seller for all State and local taxing jurisdictions within that State”  So now remote sellers face up to 45 audits per year, not 1.  No fairness about that at all.

“This specific claim, that some older folks will call and place an order, is easily
addressed: when “the wife” enters the phone order into their order system, which
they must have since they have web enabled sales, sales tax will be automatically
calculated by the software just as it is when the consumer enters an order directly.
Presumably these older folks want to receive their goods, so his wife is already
entering the shipping address needed for the tax calculation. Problem solved, and
she can take the credit card info as she normally would or tell them the amount the
check should be made out for”

Sorry, wrong.  Catalog buyers, many of which are senior citizens that still fill out and mail in order forms will need to figure out their own taxes correctly.

And phone orders in our case are entered in by a customer service representative directly into our order processing software.  And the software we use is not currently supported by Avalara, a leading solution provider.  And they don’t support our Amazon orders either.  And of course, this unicorn-like free software won’t work with these systems either.  And any state can use any software they want.

There is no misleading here, except by the Marketplace Fairness Coalition who consistently and completely discounts any valid concerns about the legitimate concerns about this legislation.


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