Intended as a way of removing what Congress sees as an unfair advantage for online retailers and catalogers versus brick and mortar stores, the Marketplace Fairness Act (MFA) has been debated for quite some time. A version of the bill passed in the Senate in May 2013, but failed to pass in the House and was shelved at the end of 2014.
But now that it’s 2015, you can expect Congress to attempt once more to revive this Internet sales tax bill and get it passed. Here’s what you need to know about the MFA and what you can do to take action against it.
The MFA and e-tailers
The Marketplace Fairness Act is an effort to allow individual states to collect sales tax on sales made to residents from other states. Supporters of the bill justify it not just in terms of sales tax lost to their state because of online or catalog sales, but also in terms of leveling the playing field between brick-and-mortar and online-only businesses.
Many trade groups have opposed the MFA, including NetChoice, a trade association of eCommerce retailers, on the grounds that it would actually hurt small retailers and give the advantage to big box stores. Even the Supreme Court has ruled that it would be burdensome to force retailers to collect and remit sales tax for states where they don’t have operations or a physical presence, but the bill refuses to go away.
Possible solutions to the MFA
A “less onerous” alternative to the MFA was drafted in January 2015. The American Catalog Mailers Association (ACMA), in conjunction with the TruST (True Simplification of Taxation) Coalition it co-founded and Rep. Bob Goodlatte (R-Va.-6th), chairman of the House Judiciary Committee, worked on an MFA alternative that isn’t perfect, but is better. But this coalition needs support from retailers to keep up the fight against the MFA.
What to do
NetChoice and TruST are promoting a Hybrid Origin Solution in which retailers would charge sales tax based on their own physical location. The ACMA has a letter template it hopes retailers will use to convey to Congress how bad the MFA would be for their businesses, and why the Hybrid Origin Solution is a better way to ensure that states receive tax revenue without creating an unfair burden on e-tailers.
Make your own voice heard by becoming involved in ACMA and/or contacting your state’s representatives and senators to let them know how your business will be impacted. Learn more about ACMA here.