In Part I of this series, we covered what the Marketplace Fairness Act is and how the imposition of an Internet sales tax may be introduced to eCommerce companies. To learn what the bill is and the influencers involved, we recommend that you check out the previous post.
For Part II, we cover remaining questions, including the compliance issues you should be aware of and how you should prepare if The Marketplace Fairness Act becomes law.
When Would The Marketplace Fairness Act Take Effect?
The earliest a state could begin enforcing the law is the first day of the calendar quarter that is at least 90 days after the Marketplace Fairness Act bill becomes a law. This means that if the bill passes in November 2013 (for example), then states may begin taxing in April 2014. They could not start in January of 2014 because, even though that’s the beginning of the new quarter, 90 days had not elapsed since November. The 90 days rule applies to states that are members of the Streamlined Sales Tax (SST) Governing Board, as well as non-SST states that meet alternative criteria.
What is the SST Organization?
The SST organization is designed to create a national standard for state sales tax product definitions, tax rates, and administration. Basically, the goal of the SST project is to simplify the tax code for the purposes of interstate commerce and an Internet sales tax. If the Marketplace Fairness Act passes, the states will have to abide by the Streamlined Sales & Use Tax Agreement or implement a minimum set of simplification measures. While currently only 22 states are members of the SST organization, 44 support the SST project, and it’s expected that the other states will join if a national mandate on internet sales tax becomes law.
If you’re wondering why this SST stuff is important, that’s because you’ll want your tax collection software to be certified by the SST Governing Board.
What Software Should My eBusiness Implement?
For that, we recommend our partner Avalara, whose AvaTax software is SST-certified. Avalara provides end-to-end sales tax compliance, reducing audit rates and helping you calculate tax rates, manage exemptions, file forms, and remit payments. Read More …