Multi-State – Federal Remote Seller Legislation Introduced

2/20/2013

SALT Report 2166 – On February 14, 2013 the House of Representatives and the United States Senate introduced the federal Marketplace Fairness Act of 2013. This bill authorizes states to require remote sellers, except those that meet the small seller exception, to collect and remit state and local sales and use taxes.

Small Seller Exception

This version of the Act would only apply to remote sellers whose total remote sales in the preceding calendar year exceed $1 million. To determine whether the small seller exception has been met, the sales of all persons affiliated with the seller would be included in the total.

Administration Requirements

Streamlined Sales and Use Tax Agreement Member States – Each member state would be authorized to require sellers that do not meet the small seller exception to collect and remit sales and use taxes.  Member states would be allowed to exercise their authority 90 days after the state publishes a notice of intent to exercise their authority.

Non-SSTA Member States- A state that is not a member of the SSTA would be authorized to require all sellers that do not meet the small seller exception to collect and remit sales and use taxes if the state adopts and implements certain minimum simplification requirements. The state’s authority would begin no earlier than the first day of the calendar quarter that is at least six months after the state enacts legislation.

Simplification Requirements

In order to enforce collection requirements on remote sellers that do not meet the small seller exception, states would be required to implement each of the following requirements.

  • Provide a single entity responsible for all state and local sales and use tax administration, return processing, and audits for remote sales sourced to the state; and a single sales and use tax return to be used by remote sellers to be filed with the single entity responsible for tax administration.
  • Provide a uniform sales and use tax base among the state and the local taxing jurisdictions.
  • Source all interstate sales according to sourcing definitions.
  • Provide information regarding the taxability of products and services along with any product and service exemptions.
  • Provide software free of charge for remote sellers that calculates sales and use taxes due on each transaction at the time the transaction is completed; that files sales and use tax returns; and that is updated to reflect state and local rate changes.
  • Relieve remote sellers and certified software providers, from liability for the incorrect collection, remittance, or non-collection of sales and use taxes, including any penalties or interest, if the liability is the result of an error or omission made by the CSP, the remote seller, or incorrect software.
  • Provide remote sellers and CSPs with 90 days’ notice of a rate change and update the taxability and exemption information and rate and boundary databases.
  • For SST member states, the above requirements would have to be included in the SST Agreement.

The bill also discusses limitations, sourcing rules, definitions and special rules.

For Further Information

Marketplace Fairness Act of 2013 – HR 684

Library of Congress – Bill Summary and Status