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From My State to Yours: Internet Sales Tax Legislation Equals Cross-border Tax Liens


Posted by Katie McAuliffe on Thursday, April 25th, 2013, 6:24 AM PERMALINK


The Senate has been holding votes on S.743, the Marketplace Fairness Act (MFA).  A procedural vote was just held with 75 in favor and 22 opposed.  MFA doesn't just mean taxes it means tax enforcement that includes audits, court proceedings, and tax liens.

Tax collectors are poised to expand their tax base to people who cannot vote for them.  Under MFA, nothing prevents Illinois from aggressively going after businesses in Louisiana that they believe haven’t paid enough in sales taxes.  

MFA says that businesses in all 50 states that sell remotely have to collect and remit sales taxes to the states they sell into. However, nothing prevents Business in Texas from being subject to the New York taxation authority and the New York court system.

States are required to provide online sellers software to comply, but there is no requirement for a national software system in the MFA, so Businesses could feasibly have 45 different software regimes to implement.
States claim they are losing out on $23 billion, in revenue, but that’s a nationwide number and only half comes from online sales.  States are arguing over a shared number somewhere between about $8 and $12 billion.  The software implementation will certainly cost more than each state’s share of that figure.

For some more perspective, the cumulative total of all state general funds is $668 billion, $8 to $12 billion equals one percent of that figure. States want a massive expansion of tax authority for less than 1% of their budget.

This is a massive expansion of tax authority across state borders for a plan that doesn’t raise enough money to even pay for itself. Its no wonder we’re in budget short falls everywhere.  

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