Middle market businesses should prepare for compliance changes under the Marketplace Fairness Act

Private Company Services Tax Insight

Although the potential impact of federal legislation requiring remote sales tax collection (the Marketplace Fairness Act or MFA) has been focused mainly on large internet retailers, this legislation could have a substantial impact on any middle market business making sales in multiple states or pursuing an e-commerce strategy.

While viewed and promoted as an ‘internet seller’ bill, MFA would affect any business that makes sales over $1 million annually into states in which it does not file sales tax returns (e.g., states without ‘nexus’). MFA would allow a state to collect sales tax from any ‘remote seller’ making a ‘remote sale’ into the state, which would result in significant additional compliance responsibilities for businesses.

With the Senate passage of MFA in May on a bipartisan basis, the bill has taken a major step toward becoming law. As a result, it is essential for middle market companies to begin analyzing the ramifications of this legislation and preparing to develop and implement a compliance process accordingly.



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