What is Fairness?
The blending of the traditional and online marketplaces has become the new reality of 21st Century commerce. But one thing has not changed—when payment is rendered in exchange for goods, a sale has occurred.
For those states with a sales tax, all of these purchases are currently subject to a tax. However, out-of-state sellers are not currently required to collect the sales tax, which means that the responsibility falls to consumers to report it to their state department of revenue. The playing field isn't level for all sellers and states are unable to collect more than a fraction of the revenue that's owed.
We need a commerce structure that is vibrant, viable and equitable for everyone. The reality is that what was adequate 20 years ago is no longer effective in today's marketplace and today's technology and services make collection possible for sellers of all sizes. It is time to pass federal legislation that empowers states to update their sales and use tax laws to level the playing field for all sellers, protect states' rights, and make life simpler for consumers.
Marketplace Fairness will harm small business - MYTH
- The Marketplace Fairness Act specifically protects truly small businesses by including a $1 million exemption on remote sales. To put this in perspective, over 99 percent of all online sellers will not be affected by this legislation in any way. Not surprisingly, opponents of the MFA have been unable to dispute this fact. In contrast, every brick-and-mortar seller must collect on the first dollars of sales as a basic part of doing business.
Collecting Sales Tax is Complex & Point of Origin shouldn't be a consideration for collection - MYTH
- Software is available in the marketplace today that makes it easy for sellers to calculate any state’s sales tax with a simple click-of-the-button. Many businesses that sell online already use these software programs. From registration to going live it can take as little as 30 minutes to set this up. Anyone who can manage an online store will not have any trouble using this software.
Small Business will face time-consuming and burdensome audits - MYTH
- This legislation requires states to provide sellers with free software from state certified providers that calculates and remits the sales/use tax due at the time of filing and files sales/use tax returns. The software providers would be subject to state audits – not the seller. It also specifically limits the liability of sellers using the state provided software. Remote sellers are relieved from liability for any incorrect tax collected (or not collected) if the liability is the error of the certified software provider or if the liability results from incorrect information or software provided by the state.
Marketplace Fairness Act will hurt jobs & the economy - MYTH
- A recent study by renowned economist Dr. Arthur Laffer reached the exact opposite conclusion. Dr. Laffer’s report outlined how addressing the antiquated sales tax loophole and empowering state and local governments has the potential to create hundreds of thousands of new jobs across the country.
To see Dr. Laffer's complete study and a breakdown of how passage of the Marketplace Fairness Act would impact your state, click here.
To read a complete Myth vs. Fact file, click here.
New PwC Report on Myths in the Online Marketplace