It still has to pass the House in order to become law, but it’s getting closer to becoming a reality. So, what is the Act and how will it affect small business? Basically, the Marketplace Fairness Act grants states the right to collect sales tax from online retailers. So, if you are an online retailer who sells products in all 50 states, you would have to start collecting and reporting sales tax in all 50 states, not just the state you operate in. This seems like it could become an administrative nightmare, considering each state has it’s own sales tax rates and reporting guidelines. The Act does require states to simplify their sales tax code. But, it remains to be seen how “simple” the reporting process would become. Luckily, most small businesses will qualify for the Small Seller Exception. This exception states that the law only applies to retailers who do more than $1 million in sales a year. For now, we’ll have to wait and see if it passes the House of Representatives.
