Are you an online retailer making more than $1 million per year in sales? If so, Blair Stover has some important news to share with you.
Under the proposed Market Fairness Act (MFA), which was passed by the Senate this past May, you may soon be required by law to collect sales tax from your consumers. The MFA will soon be reviewed by the U.S. House of Representatives, and perhaps be sent to the White House. If signed into law, the MFA will change the way you do online business quite dramatically.
Before getting into the specifics of the MFA, it’s important to note that online retailers who make less than $1 million per year in sales would be exempt from the legislation. Those who make the required amount, however, would have to begin collecting taxes from every customer, based on the state in which that customer was having his or her product shipped.
Keep in mind that the tax-exempt states of Alaska, Delaware, Montana, New Hampshire and Oregon would remain exempt from state tax under the MFA. What’s more, companies under the MFA would be required to submit individual state tax returns for each state in which they did business that year – which could mean submitting up to 46 state tax returns. Further complicating the issue, companies would have to follow the unique regulations set forth in the more than 9,600 individual tax jurisdictions when dealing with taxes.
For now, online retailers must wait and see if the MFA is passed through the U.S. House of Representatives. While no action is required yet, it’s a good idea for ecommerce companies to be aware of the possibility of the MFA becoming legislation, and what that could mean to online business as a whole.