Today (Wednesday, September 25, 2013) the True Simplification of Taxation Coalition (TRuST), of which DMA is a founding member, released a report, The Real World Challenges in Collecting Multi-State Sales Tax. Written by independent Internet business experts, the report is a direct complaint to the proposed “Marketplace Fairness Act” which requires online retailers to comply with up to 10,000 different tax jurisdictions.
Proponents of the Marketplace Fairness Act claim that the free software required in the Act will alleviate any administrative burdens for sales tax collect imposed by the Act.
Au contraire, the report shows that small and medium sized American companies will spend between $80,000 to $290,000 to integrate “free tax calculation software” into their operating systems. “While MFA requires each participating state to offer some kind of free software solution,the result is hardly free,” the report states. Instead, retailers will be forced to either comply with 46 different sets of rules, or hire an outside firm which can integrate all the schemes. Although the Act is supposed to protect business from compliance fees, there is nothing in the Act that covers technology integration or requires outside firms to provide the service free of charge.
Bottom line: There is no free lunch and the facts in the report prove it. The report outlines five areas of customer-facing, supply chain and technical difficulties in complying with this onerous and unworkable type of system.
This report will be used by the Coalition members and DMA to continue to fight for a simple solution of rules, remittance and auditing that closely resembles what brick-and-mortar stores do today.