October 9th, 2012— As more and more people discuss the upcoming Presidential election, many e-commerce and marketplace sellers are turning their attention to the upcoming possibility of collecting sales taxes. Three pending bills (Main Street Fairness Act, Marketplace Equity Act, and Marketplace Fairness Act) could become passed this year making it extremely confusing and difficult for sellers as they would become liable for all sales taxes in every state they do business in.
For years states have been seeking the legislation of taxing e-commerce businesses as, to their estimates, they are missing out on potentially $23 billion in loss revenue. In 2011, senators introduced a bill that would overrule the Quill Corps. v. North Dakota ruling and allow states to collect sales taxes on internet sales. The original ruling was established in 1992 when North Dakota attempted to impose taxes on Quill Corps, a Delaware-based stationary company that sold computer software to users in other states. The Supreme Court later ruled that a business must have a physical presence in a state for that state to require it to collect sales taxes. If these looming bills are passed, the cost of doing business on the internet could rapidly increase and complicate things come tax season for online merchants.
When these taxes go into effect, and we say “when” because its bound to happen, merchants are going to be facing not only file returns for each taxing state, but calculating over 9,600 tax jurisdictions, each one having its own rates and sale tax holidays. Although e-commerce businesses doing less than $500,000 in annual sales will not face the tax burden, larger merchants will be required to pay up. The only way online retailers can help prevent and voice their opinion of the upcoming law is by contacting congressmen and senators and even then, it looks like this will eventually go into effect.