Marketplace Fairness Act – The Ever-Shrinking Small Business Exemption

First of all, let me just state that $1 million in sales is too low of an exemption level to bear the brunt of the costs in time, effort and money to become tax collectors for the states.  But what I was surprised to learn is that the exemption level has been all over the map and the states would love it to be even lower.

In the 2007 version of the Marketplace Fairness Act bill, the small business exemption level was $5 million in remote sales per year.

So why is it down to $1 million now?

But it gets worse.

The states and the Streamline Sales and Use Tax Agreement specifies a lower level of $500,000.  And, their desire in their rules to shrink that exemption down to $100,000 as they continue to “simplify”.

I fully expect that if MFA becomes law, the states will continue to expand the reach of their new revenue source.


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