The Marketplace Fairness Act is one that should be intimately familiar to many small business owners, particularly those that tend to handle a lot of transactions made online. The law in its original form provided an exemption specifically for smaller companies with fewer revenues, but a new version of it in the U.S. House of Representatives may be more problematic.
The U.S. Senate originally passed the bill back in May, and included provisions that any companies with less than $1 million in annual revenues would be exempt from the law, which mandates that companies that do business online will have to charge sales tax for the state in which the buyer lives, according to a report from Bloomberg Businessweek. A number of organizations and major companies, including EBay, disagreed with even that allowance, and wanted it raised, instead, to $10 million.
However, the House’s version of the bill took out that exemption altogether, and this time it seems there is little in the way of opposition to the proposal, the report said. Originally, many people against the law said that it would create a significant burden on small business owners on the basis that they would have to put together massive amounts of tax returns as a result of purchases coming in from many different states, but the House has apparently vowed to focus on “simplicity” and affordability with regard to compliance requirements.
“We’ve been on the record for years that we believe the small seller exemption is a relic from when the software was extremely expensive,” David Campbell, chief executive officer for the tax compliance software provider FedTax, told the newspaper. “We’ll support whatever exception Congress thinks is O.K., but we vehemently disagree that compliance has to be complex or expensive.”
It remains unclear, however, whether this bill will even pass the House, or what form it would have to take to do so, the report said. Currently, it’s in hearings with the House Judiciary Committee, which is where the tenet of simplicity, and also of “tech neutrality,” were introduced.
Owners would likely do well to make sure they are keeping up with all the latest news regarding the progress of this bill, which could significantly cut into their annual budgets. Those worried about the financial impact, though, may want to think about ways they can reduce costs, including those for small business insurance. Cutting premiums for liability insurance and other types of coverage may help give companies more flexibility going forward.
