A letter from Rick Smith of Synergy Computing has been sent to remote sellers to encourage them take a stand against the Marketplace Fairness Act. The MFA, currently in the House Judiciary Committee, will impact all online retailers that make more than $1 million in remote sales annually. Not only this, but vendors, manufacturers, and distributors who sell to these online sellers will be impacted as well, regardless if they sell direct to consumers:

  • Online retailers and manufacturers already are required to pay sales taxes in the states in which they have physical presence, or nexus. The new bill would require companies to collect sales tax on their behalf even without nexus, resulting in up to 46 state sales tax audits every year.
  • The letter outlines two scenarios of how the law will affect sellers, both equally problematic. General issues for everyone include the substantial time it would take to process these audits and compose monthly reports, as well as the heavy costs of obtaining the proper software and integrating trained personnel.
  • The first scenario addresses manufacturers who sell to retailers and directly to consumers. These manufacturers would be subject to the same compliance and audit burdens as other retailers in every single state that applies. Pro-MFA legislators have even introduced a myth of “free software by the states.” Since every state can pick its own software, this means that a company will have to sign up with a paid service to deal with 45 different versions of tax software.
  • The second scenario addresses true-wholesale manufacturers who do not sell directly to consumers, and instead only serve retailers. Their audit risk jumps up to 4500%. With the MFA, they would be subject to the same audit risks as retailers, and would need to prove that their sales are “properly exempt sales.” Their exemption certificates better be on file—if the MFA is passed, they will be audited.

Digital Liberty encourages you to take action and let Congress, as well as your state and local governments, know how the MFA will do nothing but harm online businesses. Spread the word of the MFA’s headaches and hard costs. This bill has already passed the Senate—we need to make sure the House shuts it down!

Read the letter here.