Sales Tax Reform May Not Be Seen Until 2017

Two sales tax reform bills have been introduced to Congress this year:  the Marketplace Fairness Act and the Remote Transaction Parity Act.  The Marketplace Fairness Act (MFA) passed the Senate in 2013 but did not make it through the House Congressional session that ended in 2014.  It was reintroduced in 2015 with very few changes.

Utah Congressman Jason Chaffetz introduced the Remote Transaction Parity Act (RTPA) claiming it is friendlier to small business owners than the MFA.  The bill would initially exempt online businesses making less than $10 million in remote sales per year from collecting sales tax at the time of the purchase, rather than leaving it to the consumer to remit the sales tax.

In contrast, the Marketplace Fairness Act would require businesses making more than $1 million in remote sales per year to collect the tax at the time of the purchase.  However, Chaffetz’s bill does lower the threshold to $5 million in the second year the Act is in place and finally to $1 million the third year essentially making it synonymous to the MFA.

E-commerce is estimated to be a $304 billion market and States are trying to ensure they receive the sales tax revenue that they are entitled to.  It is obvious to Congress that some reform needs to take place.  Both bills have bipartisan support.  They just have not been able to find their way to required Congressional hearings that would eventually push them to legislation.

Chaffetz is positive stating, “We’ve had more movement over the past few months than there’s been in years.  We just have to keep that drumbeat going.”  Although, if action is not taken quickly, another year will pass without legislation happening.

Congress has been away from Washington for their August recess and tentatively has less than 60 days in session for the rest of the year.  Furthermore, both bills have requirements laid out by the chairman of the House Judiciary Committee that have not been met.  Legislation is not likely to be swift in an election year.  It very well could be 2017 when a new Congress is seated before sales tax reform is taken.

Tips for the Taxpayer
Ensure you are up-to-date with sales tax legislation.  If you are concerned or have questions about the Bills being introduced and debated, contact your Congressman.  For information on the Marketplace Fairness Act check out www.marketplacefairness.org and for the Remote Transaction Parity Act see www.rtpact.org.

For More Information
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