What is the Fairness Act?

The Marketplace Fairness Act 2013 being debated by the U.S. Congress and the American public, is it fair or unfair?

  • The Marketplace Fairness Act grants states the authority to compel online and catalog retailers ("remote sellers"), no matter where they are located, to collect sales tax at the time of a transaction - exactly like local retailers are already required to do. However, there is a caveat: States are only granted this authority after they have simplified their sales tax laws. Source: http://www.marketplacefairness.org

  • Answer:

    I read the act (available at http://beta.congress.gov/bill/113th-congress/senate-bill/336/text). The act exempts small sellers (those with less than $1 million in gross revenue nationwide) so it's not going to impact many of the mom-and-pop Web sites or the eBay'ers. With that exception, and with states who want to avail themselves of its privileges being required to either adopt the http://www.streamlinedsalestax.org/ or adopt many of its key provisions, I think it's a reasonable and fair approach.

Mike Emeigh at Quora Visit the source

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Your website addresses the issue of collecting taxes and I can imagine this can be codified reasonably easily and might not be too much of a burden on the collection side, but does not discuss how compliance works to pay the taxes to the various states and municipalities. I don't operate an ecommerce business and never will, but I would be worried about that if it were me. Providing adequate documentation and reporting to 50 states and however many municipalities sounds like a complete nightmare to me. I assume that's something you'd need to do monthly or perhaps quarterly. You get questions back from a bunch of those entities each time. Not obvious to me how that could be anything but a huge timesink and is probably not something that those businesses have any particular skill in, so there is a start-up effort and probably on-going compliance expertise required to learn enough to do it properly. And the $1M minimum sounds like a bogus metric to me. To economic novices, that may sound like a lot of money, but it isn't. If the business operates at, say, a 3%-5% net margin (which is not uncommon for retail sites), they don't actually have much money to work with to implement the IT and staffing solutions required to make this a reality. So is it fair or unfair. I don't know enough to say.

John Kenney

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