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.

 

Comments

  1. Both of these proposed bills are absurd. While they are couched in nice, fair sounding titles the reality is they are attempting to turn online sellers into tax collectors. Many online sellers are essentially small businesses employing 1-10 people. They do not have the manpower or technology to collect taxers in all 50 states.

    What they do is provide jobs, pay taxes in their state of residence – personal and business – and contribute to the economic growth.

    They should not be required to collect taxes from which they receive no benefits, no schools, no roads and highways – no government benefits whatsoever.

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  1. […] bill was essentially written by the Tax Certified Solutions Providers (related article here) and is crony capitalism at its worst.  The RTPA had a last minute addition to the March draft […]

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