Marketplace Fairness Act
Marketplace Fairness Another Tax Base Expansion Federal Regulation ($23.3 Billion to be collected in this Tax Expansion)
It seems the Marketplace Fairness Act seeks to level the playing field when it comes to Sales Tax. This is another way to create another regulation, which is already in place through prior regulations. Another example of the expanding pages in the law books, so much for tort reform.
Regulations are already in place to cover taxes collected by online retailers and/or Internet retail sales. The Marketplace Fairness Act will shift the burden to Entrepreneurs. In addition, it will allow the Federal Government to have increased interaction in a States power to tax.
1st - It is Regulated by the States on a State by State Basis through Sales Tax
At this point, an individual States already regulate Internet retailers by having or not having an online retailer collect sales tax called destination sales tax. It is enforced through State Law on a State by State basis. Most online retailers must collect Sales tax if the item is shipped to a purchaser within the State the Online Retailer resides in.
If an online retailer has a physical presence in a particular state, such as a store, business office, or warehouse, it must collect sales tax from customers in that state. If a business does not have a physical presence in a state, it is not required to collect sales tax for sales into that state. This rule is derived from a 1992 Supreme Court decision which held that mail-order merchants did not need to collect sales taxes for sales into states where they did not have a physical presence.
2nd - It is Regulated through Use Tax - So Pay Your Use Tax
Many States have a Use Tax. This is a tax that must be paid when you purchase an item as an individual or business. This is usually equivalent to a States sales tax, and covers the Sales across State Lines.
For instance, if you sell a widget in Indiana and ship it to Ohio. The purchaser in Ohio should pay use tax, aka sales tax to Ohio.
Use tax is usually paid at the same rate as the state's sales tax. For individuals, use taxes are typically reported and paid with your state income tax return. Businesses may need to file a special sales and use tax return with their state’s tax authority. Sometimes individuals will also need to file a special sales and use tax return for larger transactions such as vehicle purchases that are subject to use tax.
Finally
The Marketplace Fairness Act wont' level the playing field, it will crush and complicate the small one person entrepreneur trying to start his dream business on a shoe string in his garage. The entrepreneur who already has to pay sales tax, income tax, use tax, property tax, air and widget tax.
One could argue that a New Federal Law may unify the code across the nation, and allow small retailers compete. It will just complicate things, and the States already have the power to level the playing field. It is an expansion of sales tax by the Federal Government and should be called what it is.
In 2013, many small retailers or entrepreneurs have turned to the Internet to survive or to champion entrepreneurial spirit. It is important to simplify the tax system, and make it less burdensome for people who want to harness the entrepreneurial spirit, to do just that. Innovation and hard work will once again be stifled if this law is added to the book of regulations.
Just a thought... Jeremy
Our States our the Special Interests Lobbying for this Sales Tax Expansion
The Washington Times: PAUL: An ill-advised Internet tax mandate
Huffington Post: Marketplace Fairness Act, Bill To Tax Online Sales, Moves Toward Senate Vote
How the Marketplace Fairness Act--aka "Internet Tax"--Will Affect You
The Misnamed Marketplace Fairness Act
