Marketplace Fairness Act of 2013

“Taxation without representation” was a core cause of the American Revolution.

From’s CCH Examines Marketplace Fairness Act article:

On Monday, the Senate passed the Marketplace Fairness Act, which requires web vendors to collect sales taxes from their online sales, even if they lack a physical presence in the state where the customer resides. The bill has now moved to the House for consideration, where it faces opposition from anti-tax lawmakers.

This controversial Act has its own website:


A Congressional Research Service (CRS) report suggests the compliance burden associated with the bill would force businesses to set up shop outside of the United States, leading Sen. Ron Wyden (D-OR) to call the proposal the “Shop China Bill.”

I sympathize with both sides of this argument. Brick and mortar retailers have legitimate cause for complaint. However, last Fall I documented the burden of collecting and reporting sales taxes in 9600 taxing jurisdictions: Let’s rationalize state sales tax.

Two solutions not on the table

Note that the obvious solution — reduce taxes collected by brick and mortar businesses — isn’t even considered. Another solution would be the repeal of state and local sales taxes in all 50 states.

The National Review article Misnamed marketplace fairness act is okay, but the comments are better still.

My sales tax automation experience

I’ve been involved in integrating 50-state sales tax collection and reporting systems with automated order processing systems. It’s extremely expensive, disruptive, and time consuming. It also adds recurring tax table subscription costs to fixed overhead. (Imagine the cost of gathering tax rates from 9600 tax authorities and compiling them into one giant table every month.) The order entry system must look up the tax in this table for each transaction as the order is entered and apply it to the order. Then at each month’s end, the system must decide which taxing authorities require reports and generate and submit those reports. Many — probably most — small businesses can’t afford these costs.

Visit my website:
© Russ Bellew · Fort Lauderdale, Florida, USA · phone 954 873-4695


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