ONLINE SALES TAX 2015

Susan Petracco, AccurateTax.com

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

Sales Tax

$$$

Use Tax

A connection or series of connections linking two

or more things.

https://www.google.com/webhp?hl=en#hl=en&q=nexus+definition

NEXUS

Sourcing Rules

Older Legislation / Efforts

• Quill Decision - 1992

• Main Street Fairness Act – 2010

• Marketplace Fairness Act – 2011

Marketplace Fairness Act 2013

• Passed Senate

• Speaker John Boehner (R-OH) stalled 18 months

• Expired December 2014

7 Key Principles on Remote Sales Tax

• Rep. Bob Goodlatte (R-Virginia)

• September 2013

7 Key Principles on 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

Online Sales Simplification Act

• January 13, 2015

• Origin Sourcing

• Applies to remote sales

• States must agree to participate or waive funds

• NOMAD states

• Response

IT’S BA-ACK

Marketplace Fairness Act of 2015

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

MFA 2015 – How it differs

Changes from earlier versions:

1. Adds limitation on when taxation begins

2. Exception for small business (under $1mil)

MFA – The Positives

• 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

MFA – The Negatives

• 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

MFA – Who’s For 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

MFA – Who’s Against 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

Supreme Court Speaks Up

• Justice Anthony Kennedy calls for case to reexamine Quill Decision

Other Initiatives

• Amazon reports 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

Streamlined Sales Tax Project

Understanding Your

Responsibility as a

Retailer

What do you sell?

Where do you sell it (from)?

• Understanding Nexus

• What activities create nexus?

– Trade Shows

– Fulfillment House

– Drop-shipping

How do you sell it?

• Brick and Mortar

• Website

• Amazon / eBay

• Affiliates

Miva – State Based Sales Tax

Miva – Zip Code Based Sales Tax

Miva – Third-Party Services

• 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

THANK YOU!

Susan Petracco, VP Strategic PartnershipsAccurateTax.com @AccurateTax