Congress Introduces Marketplace Equity Sales Tax Bill

A new online sales tax bill has been introduced in Congress. Contrary to the Main Street Fairness Act proposed this summer, participation in Streamlined Sales Tax is not required. According to the bill, in order for a state to require the collection of online sales and use taxes, the state must first implement a simplified system of sales tax administration, meeting four requirements. Remote sellers with less than $1 million in U.S. sales or $100,000 in sales in the state are exempt. Remote sellers will only have to file one sales and use tax return specific to remote sellers for the state, and they cannot be required to file returns more frequently than other sellers. There must be a uniform statewide tax base. Finally, remote sellers must collect sales and use tax under one of three rate structures: a single rate blending the state rate and the average local rate; the maximum state rate exclusive of local rates, or; the tax rate of the customer’s location, in which case the state must make available software that eases the burden of collecting at multiple rates. If a state imposes a lower rate on food or drugs and medicine, it may require remote sellers to collect sales and use tax at these rates. Once a state is authorized, the state may begin collecting six months after publishing a notice that lists the requirement, the criteria under which the collection is required, the effective date, the rate(s), and where remote sellers can obtain the tax filing return. (H.R. 3179)

Posted on November 14, 2011