Yes, you’ve seen this movie before: Congress comes up with a bill to tax e-commerce. An impassioned battle ensues, and the bill stalls somewhere in the halls of Congress, never to make it to the president’s desk. But this time may be different.
H.R. 2775, The Remote Transactions Parity Act (RTPA), was introduced in the House last month. And it holds more promise of passage than its predecessors.
That’s because the bill builds on the framework of the Marketplace Fairness Act, but with some key differences.
There’s still a ways to go before the bill becomes law, but with the far-reaching implications for both A/P and A/R, you’ll want to know what’s coming.
4 critical differences from the Marketplace Fairness Act
Like the Marketplace Fairness Act, the RTPA would seek equal sales tax footing for brick and mortar and online sellers.
But there are also some key differences between the two bills. And those differences are what’s giving this latest version so much promise of passing through Congress. Take a look at where the RTPA departs:
- You will avoid some audit exposure. Your company won’t have to worry about being audited anywhere you don’t have a physical presence (unless fraud is suspected). The new bill avoids this can of worms by making it clear that sellers will not be audited in states without one. However, certified software providers will be audited.
- You’re protected by a statute of limitations. You can also rest easier knowing there won’t be an endless window to claim back sales tax liabilities. The new bill sets a three-year statute of limitations.
- You may get more time to comply. One of the unique features of this bill is a phase-in for compliance. In the first year, the exception applies for sellers making sales of $10 million or less. In the second year, the threshold lowers to $5 million and in the third year, that threshold drops to $1 million. Then the break is over – the exception ends in the fourth year.
- You’ll have more clarity. Once and for all, the definition of a “remote seller” will be clarified. That should hopefully put an end to much of the confusion that led to compliance problems in the past and had made this such a sticky situation. Under the RTPA, you’d be considered to have a physical presence in a state if you: (a) have employees assigned to the state; (b) use the service of an agent to establish or maintain a market in the state provided the agent does not perform services for anyone else during the taxable year; or (c) lease property in the state.
Of course, just like all the others before it, this bill has some miles to go before it’s a law. Count on us to keep you updated every step of the way.
Info: For more on the RTPA, including the text of the bill and its progress, click http://rtpact.org
