No doubt you’ve heard about the Marketplace Fairness Act, but do you know what it means and how it could affect your business? Here’s a quick read to learn more about the Marketplace Fairness Act and what it could mean to you.
What is the Marketplace Fairness Act?
The Marketplace Fairness Act is a current federal legislation piece that if passed, could give states the power to require out-of-state businesses to collect sales tax everywhere they sell – including remote retailers with no physical presence.
Who will the Marketplace Fairness Act affect?
As it is currently written, the Marketplace Fairness Act could affect a multitude of businesses that make interstate transactions. If put into place, it could require those meeting a certain threshold to collect sales tax in numerous additional jurisdictions, if not all. If this bill becomes law, states could gain authority to make remote businesses collect sales tax, some within 180 days of the bill’s passage.
Which states can collect sales tax from remote businesses if the Marketplace Fairness Act passes? And how quickly?
So if the Marketplace Fairness Act doesn’t pass, am I in the clear?
Not necessarily. Recently there’s been a shift in how tax on remote sales is perceived. Although the Marketplace Fairness Act is positioned at the federal level, states like California, New York, and Florida have already passed new nexus laws regarding online sales, and how business collect taxes.
What can I do to prepare?
While it’s unknown if or when federal sales tax legislation might happen, automating sales tax management with technology makes sense regardless of state or national legislation. With more than 10,000 taxing jurisdictions in the US and thousands of annual tax rate, rules and boundary changes, getting sales tax right is nearly impossible. The ever-changing landscape of sales tax not only takes focus away from your core business, but missed updates or improper calculations can also carry financial risk.
Automating the traditional processes associated with manually calculating and managing sales tax helps organizations:
- Save time – by eliminating the need to research rates or build and maintain tax tables
- Increase accuracy – with address validation and auto-jurisdiction assignment
- Mitigate risk – with easy to access and review reports
- Gain efficiency – by filing and remitting payment for taxes in minutes
- Focus on what really matters – making great products, providing great services, continuous growth
Interested in learning more?