No claim is more popular among opponents of the Marketplace Fairness Act than that MFA would require businesses to file taxes in something like 10,000 jurisdictions. The most emphatic opponents even talk about audits from 500 Native American governments. Those numbers are meant to play on the worst fears of their audience of business owners. I enjoy great storytelling as much as anyone, but we’re talking about a make-or-break policy for Main Street businesses around the country. It’s not story-time, and we have a responsibility to the facts.
The Marketplace Fairness Act of 2013 says that states get to decide how they want to collect sales taxes on internet retail sales as long as they make compliance reasonably simple and easy. State governments that want to collect these taxes can either simplify their sales tax code in accordance with the Marketplace Fairness Act, or they can join the more rigorous Streamlined Sales and Use Tax Agreement, also known as SSUTA. About half of U.S. states have already adopted laws in accordance with SSUTA.
Under the Marketplace Fairness Act, states can only require Internet sellers to collect sales tax if they have “a single entity within the State responsible for all State and local sales and use tax administration, return processing, and audits for remote sales sourced to the State.” This means that a single state office handles everything including local taxes. If a state chooses this option, remote sellers would have to interact with exactly one office in that state.
States must also provide “a single audit of a remote seller for all State and local taxing jurisdictions within that state” Find out more here. To reiterate, that’s one office, one audit, one system per state. That means the worst-case scenario of tax jurisdictions is less than 1% of the 10,000 that opponents of Marketplace Fairness have threatened. And this stuff isn’t buried in the legislation; it’s on page two of four that make up the whole bill. Similar language appears in the first few pages of the SSUTA.
As a business owner I’m sympathetic. We’re busy people and don’t usually have time to do a lot of our own research on legislation. So if this was just about correcting a single false claim I probably wouldn’t have been so bothered. But I want others in the business community to know that the opponents of Marketplace Fairness are not credible. Look at their claims and then look at the facts. Maybe they have not read the legislation or maybe they have read the legislation and are fully aware of the fraudulent claims they continue to repeat. Either way they cannot be trusted on this issue.
Opponents of Marketplace Fairness are sounding one false alarm after another. They invent information to play on fears and vulnerabilities in the business community until there feels like no difference between “I don’t understand this legislation” and “this legislation will make me close my business.” That kind of manipulative lobbying is dangerous and in this case the message is also insulting—like internet entrepreneurs can’t handle the same compliance costs that brick-and-mortar entrepreneurs deal with every day. But unlike these critics, I have faith in my competitors, in the free market, in business owners, and in voters. And maybe most important of all, I have faith that a few facts will reveal the truth even in the face of 10,000 clever lies.
Zachary Hoffman is the President of Wiley Office Furniture in Springfield, IL.