States pay CSPs – We get nothing

If the Marketplace Fairness Act passes, remote retailers will have a variety of integration issues (if support for their platform even exists) and costs.  Personnel costs in time and salary, CSP fees (for most) and even paying for the credit card fees on the newly collected sales tax.   As covered in a previous blog post, remote retailers will pay around $2,000 per year, per million in sales.  So we become unpaid state tax collectors, with all of the compliance burdens and no reimbursements for our costs.  Big-box retailers (like those sponsoring the MFA) can usually get some reimbursements from the states.  But we’re not Wal-mart.

Who does get paid by the SSUTA states?  The Certified Solution Providers (CSPs).  And a lot.

The CSP compensation schedule is per merchant, not total.  So most retailers will be in the top-2 tiers of reimbursement.

  • 8% – up to about $3.5 million in sales on average
  • 7% for the amounts above $3.5 million to $14.5 million.

Sample figures for a hypothetical retailer with 7% sales tax average.

$1 million in sales – $70,000 in collected tax.   CSP gets $5600 per year.    Retailer stuck with $2000 in CC fees alone.

$3 million in sales – $210,000 in collected tax.  CSP gets $16,800 per year.  Retailer stuck with $6000 in CC fees alone.

$5 million in sales – $350,000 in collected tax.  CSP gets $27,000 per year.  Retailer stuck with $10,000 in CC fees alone.

Thanks for nothing.

The Streamlined states group have batted around reimbursing retailers for costs incurred but have done nothing.   There’s room in the SSUTA values to compensate retailers, but we’re not at their meetings and don’t have the cozy relationship CSPs do.

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