Senate Legislation Would Allow States to Require Tax Collections on Remote Sales

The Marketplace Fairness Act (S. 1832) would allow states to require sales and use tax be collected on remote sales, provided: (i) the state belongs to the Streamlined Sales and Use Tax Agreement (SSUTA), or (ii) the state meets a series of tax simplification requirements prescribed in the legislation.

The Marketplace Fairness Act would allow states to require remote sellers to collect and remit applicable sales and use taxes to jurisdictions in which the sale is sourced.  This authorization is subject to provisions in the Streamlined Sales and Use Tax Agreement (SSUTA) for states that are members of the agreement

Non-SSUTA states could also require remote sellers to collect sales and use tax, provided they meet the following simplification requirements (taken from directly from the legislation):

Provide

(i) a single State-level agency to administer all sales and use tax laws, including the collection and administration of all State and applicable locality sales and use taxes for all sales sourced to the State made by remote sellers.

(ii) a single audit for all state and local taxing jurisdictions within the state.

(iii) a single sales and use tax return for use by remote sellers and single and consolidated providers and to be filed with the State-level agency.

Provide a uniform sales and use tax base among the state and local taxing jurisdictions within a given state.

Require remote sellers and single and consolidated providers to collect sales and use taxes pursuant to the applicable destination rate, which is the sum of the applicable State rate and any applicable rate for the local jurisdiction into which the sale is made.

Provide

(i) adequate software and services to remote sellers and single and consolidated providers that identifies the applicable destination rate, including the State and local sales tax rate (if any), to be applied on sales sourced to the State.

(ii) certification procedures for both single providers and consolidated providers to make software and services available to remote sellers, and hold such providers harmless for any errors or omissions as a result of relying on information provided by the State.

Hold remote sellers using a single or consolidated provider harmless for any errors and omissions by that provider.

Relieve remote sellers from liability to the State or locality for collection of the incorrect amount of sales or use tax, including any penalties or interest, if collection of the improper amount is the result of relying on information provided by the State.

Provide remote sellers and single and consolidated providers with 30 days notice of a rate change by any locality in the State.

Entities with $500,000 or less in remote sales in the prior calendar year (the “Small Sellers”) would be exempt from requirements to remit state and local sales taxes. 

In a departure from its position on state remote sales legislation, an Amazon official voiced the company’s support for a federal bill.  Vice president for global public policy Paul Meisner told the House Judiciary Committee on November 30 that “Amazon has long supported an even-handed federal framework for state sales tax collection”          

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