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Online sales tax 2015
The document discusses the evolution of online sales tax legislation, highlighting the Marketplace Fairness Act of 2015 and its implications for states and businesses. It summarizes key principles, the differences from previous acts, and the perspectives of supporters and opponents. Additionally, it addresses the importance of understanding tax responsibilities for retailers based on their sales activities and locations.
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Online sales tax 2015
- 1. ONLINE SALES TAX2015 Susan Petracco, AccurateTax.com
- 2. PART 1 –Sales Tax in 2015 • Prior legislation • What’s currently being considered? PART 2 – What You Need to Know • Knowing your responsibility • Sales tax and Miva Merchant
- 3.
- 4. A connection orseries of connections linking two or more things. https://www.google.com/webhp?hl=en#hl=en&q=nexus+definition NEXUS
- 5.
- 6. Older Legislation /Efforts • Quill Decision - 1992 • Main Street Fairness Act – 2010 • Marketplace Fairness Act – 2011
- 7. Marketplace Fairness Act2013 • Passed Senate • Speaker John Boehner (R-OH) stalled 18 months • Expired December 2014
- 8. 7 Key Principleson Remote Sales Tax • Rep. Bob Goodlatte (R- Virginia) • September 2013
- 9. 7 Key Principleson Remote Sales Tax 1. Tax Relief 2. Tech Neutrality 3. No Regulation Without Representation 4. Simplicity 5. Tax Competition 6. States' Rights 7. Privacy Rights
- 10. Online Sales SimplificationAct • January 13, 2015 • Origin Sourcing • Applies to remote sales • States must agree to participate or waive funds • NOMAD states • Response
- 11. IT’S BA-ACK Marketplace FairnessAct of 2015
- 12. MFA 2015 –How it’s the same • States aren’t required to participate • States must meet minimum simplification requirements: – Notify retailers of rate changes – Designate a single organization – Establish a uniform sales tax base – Use destination sourcing – Provide free software
- 13. MFA 2015 –How it differs Changes from earlier versions: 1. Adds limitation on when taxation begins 2. Exception for small business (under $1mil)
- 14. MFA – ThePositives • States receive more money (lost revenue, use tax) • Makes it easier for brick-and-mortar businesses who have to charge tax to compete with Internet-only sellers
- 15. MFA – TheNegatives • Arbitrary definition of small business • Imbalance between exempt businesses and non-exempt businesses • No-cost software isn’t necessarily free to implement • Undue burden to comply • Potential of benefitting big-box stores
- 16. MFA – Who’sFor It • President Barack Obama • Governors of Maine, Indiana, New Jersey, Michigan, Alabama, Utah, Idaho, and Georgia • Rep. Paul Ryan • Alliance for Main Street Fairness • Retail Industry Leaders Association
- 17. MFA – Who’sAgainst It • Electronic Retailers Association • Direct Marketing Association • National Taxpayers Union • American Catalog Mailers Association • eMainStreet • Agricultural Retailers Association • National Center for Policy Analysis • Computer & Communications Industry Association
- 18. Supreme Court SpeaksUp • Justice Anthony Kennedy calls for case to reexamine Quill Decision
- 19. Other Initiatives • Amazonreports for use tax purposes • Direct Marketing Association v. Brohl, Colorado • Virginia tied a gas tax increase on January 1, 2015, which will end automatically if and when a federal law related to Marketplace Fairness passes
- 20. Streamlined Sales TaxProject
- 21. Understanding Your Responsibility asa Retailer
- 22. What do yousell?
- 23. Where do yousell it (from)? • Understanding Nexus • What activities create nexus? – Trade Shows – Fulfillment House – Drop-shipping
- 24. How do yousell it? • Brick and Mortar • Website • Amazon / eBay • Affiliates
- 25. Miva – StateBased Sales Tax
- 26. Miva – ZipCode Based Sales Tax
- 27. Miva – Third-PartyServices • Your website calls out to third-party service to determine tax for each order • Rate determined by location of shipping and destination addresses and tax code • Relieves the burden of maintaining data • Costs based on usage
- 29. THANK YOU! Susan Petracco,VP Strategic Partnerships AccurateTax.com @AccurateTax
Editor's Notes
- #4 Explain the difference ASK: Which is easier for states to collect?
- #5 Physical presence Not just a store or office We’ll define some of the activities that create nexus later on In general, right now you only have to collect tax on states where you have NEXUS
- #6 Destination – use the rate of where the item is being first used (in general, shipped TO) Origin – use the rate where the item is shipped FROM
- #8 Boehner is from OHIO
- #10 1. Tax Relief – Using the Internet should not create new or discriminatory taxes not faced in the offline world. Nor should any fresh precedent be created for other areas of interstate taxation by States. 2. Tech Neutrality – Brick & Mortar, Exclusively Online, and Brick & Click businesses should all be on equal footing. The sales tax compliance burden on online Internet sellers should not be less, but neither should it be greater than that on similarly situated offline businesses. 3. No Regulation Without Representation – Those who would bear state taxation, regulation and compliance burdens should have direct recourse to protest unfair, unwise or discriminatory rates and enforcement. 4. Simplicity – Governments should not stifle businesses by shifting onerous compliance requirements onto them; laws should be so simple and compliance so inexpensive and reliable as to render a small business exemption unnecessary. 5. Tax Competition – Governments should be encouraged to compete with one another to keep tax rates low and American businesses should not be disadvantaged vis-a-vis their foreign competitors. 6. States' Rights – States should be sovereign within their physical boundaries. In addition, the federal government should not mandate that States impose any sales tax compliance burdens. 7. Privacy Rights – Sensitive customer data must be protected.
- #11 Goodlatte New Hampshire Oregon Montana Alaska Delaware Response Taxation without representation Different tax rates for same product depending on where you buy it
- #13 Notify retailers of rate changes Designate a single state organization to handle sales tax registrations, filings, and audits Establish a uniform sales tax base for use throughout the state Use destination sourcing to determine sales tax rates for out-of-state purchases (a purchase made by a consumer in California from a retailer in Ohio is taxed at the California rate, and the sales tax collected is remitted to California to fund projects and services there) Provide free software for managing sales tax compliance, and hold retailers harmless for any errors that result from relying on state-provided systems and data
- #16 ASK: how many consider yourself a small business? Where would you draw the line? IRS – $20 million SBA - $30 million for “electronic shopping”
- #17 Paul Ryan – 2012 vice-presidential candidate with Mitt Romney
- #19 Justice Anthony Kennedy Call for case to be brought forth to reexamine Quill v. North Dakota Quill decision questionable Congress instead of SCOTUS
- #26 NOMAD in gray Single rate states in orange Origin in green In any other state, you’re doing it wrong And there are exceptions here – if you sell apparel in Massachussetts, only the amount over $175 is taxable, the rest is exempt. CA and TX are modified origin, they really can’t use it. TN is current origin but is changing to destination as of July 1, so they can’t use it.
- #27 MAYBE Nevada works this way.
- #29 REPORTING deduct out returns exempt customers