The Marketplace and Internet Tax Fairness Act and what it means - Spokane, North Idaho News & Weather KHQ.com

The Marketplace and Internet Tax Fairness Act and what it means to internet retailers and local small businesses

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KHQ.COM- Right now, there's another battle brewing on Capitol Hill and it's all about sales tax, more specifically, those who aren't paying it. The Marketplace and Internet Tax Fairness Act aims to bridge the gap between online retailers that don't collect sales tax and the local mom and pop shops that do. To put things in perspective, ask yourself this question: What would you do if you could purchase shoes tax-free online without shipping and handling versus going to your local store where you do pay taxes, which means you're paying more?

According to Kim Schmanke of the Washington Dept. of Revenue, this proposed law is about leveling the playing field and making local "brick and mortar" businesses more competitive with their online competition.

A Supreme Court ruling in 1992 prevents states from requiring out-of-state businesses without a physical presence in the state to collect sales tax when they sell to people living in that state. The new Marketplace Fairness Act would change that.

The current Marketplace Fairness Act assumes businesses would not be subject to the legislation if they had less than $1 million in remote sales in a state, so for example, an out-of-state catalog company would have to sell more than $1 million in gross sales to Washington consumers before it has to begin collecting and remitting the sales tax to the state.

Schmanke says, "even though the sales tax isn't required to be collected by these retailers today, Washington consumers are supposed to pay the equivalent amount to the Dept. of Revenue as a “use tax.” If you go to Idaho or another state and purchase an item tax-free there, you are supposed to pay the Washington Department of Revenue the equivalent sales tax, as if you purchased it at a local store. The same goes for an online transaction.

A report from the Dept. of Revenue shows, if some online retailers were to report the appropriate sales taxes for their sales (between 2013 and 2015) to Washington consumers, the state would receive $62 million and local governments would get $23.7 million. That number increases dramatically when looking at estimated figures between 2015-2017. Sales tax numbers grow to $217.2 million in local sales tax for Washington communities and $478.2 million for the state.

Washington belongs to the streamlined sales and use tax agreement (SSUTA). Retailers without a physical presence that do business in the state can use a service that performs all the sales and use tax collection functions. The cost of the service is covered by allowing the service provider to keep a portion of the tax they collect. So businesses that would begin to collect the taxes under the Marketplace Fairness Act would not have additional cost. In states like Idaho, that don't belong to the SSUTA, businesses would need to provide the online and catalog retailers with a free software to assist in the collection process.

The office of Washington state Governor Jay Inslee released this statement:

"The Marketplace & Internet Tax Fairness Act is among the most important actions Congress can take to support our state this year. The legislation would finally level the competitive playing field between online retailers and Washington state brick-and-mortar small businesses and allow our state and local governments to receive uncollected revenue due them under current tax law.

Earlier this year I contacted each member of Washington's congressional delegation to urge support of this legislation. The bipartisan National Governors Association and others have also called for passage of this legislation before the end of the year. I appreciate the support that some members have provided for this policy, including in the U.S. Senate's overwhelming passage of the Marketplace Fairness Act last year.

I am, however, concerned by recent statements from House leadership indicating that this bill that enjoys support from both parties may not even be considered in that body. It is now vital that every member of our delegation work hard to ensure passage of the Marketplace & Internet Tax Fairness Act for the president's signature this year."

To find out more on the Marketplace & Internet Tax Fairness Act and how it impacts you check out these websites:

http://marketplacefairness.org/

http://1.usa.gov/1xTWcl7

http://bit.ly/1uthpQu

http://bit.ly/1xmfRdE

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