As the Marketplace Fairness Act (MFA) picks up momentum in Congress, it’s no surprise that businesses across the country are trying to figure out what it means to them. If passed, this legislation grants states the authority to require certain non-exempt remote sellers to collect sales tax.
The MFA would not override current state and local statutes surrounding product and service taxability, tax holidays, exemptions, or related rates, boundaries and rules. Existing nexus laws would not change due to this legislation. The stated purpose of the MFA is to “restore the States’ sovereign rights to enforce State and local sales and use tax laws….” The bill, as currently written, would authorize states to require remote sellers to collect and remit sales tax in accordance with state and local laws, as long as those states are in full compliance with the Streamlined Sales Tax Agreement, a member of the SST, or implement a minimum set of simplification measures.
The current state of MFA legislation
How it may impact your business
The potential schedule to comply. It could be sooner than you think.
Ways to be ready prior to enactment
Scott Peterson is Avalara’s Vice President of U.S. Tax Policy and Government Relations. Prior to Avalara, he was the first Executive Director of the Streamlined Sales Tax Governing Board—an organization devoted to making sales tax more straightforward and more uniform for the benefit of businesses. Scott also spent 10 years as the Director of the South Dakota Sales Tax Division and 12 years providing research and legal writing for the South Dakota Legislature.