AICPA Suggests Changes to Internet Sales Tax Bill to Make Collection and Remittance Easier for Businesses

October 17, 2013

The American Institute of CPAs (AICPA) told Congress that legislation to require the payment of sales taxes on purchases made over the Internet should be modified so businesses that would have to collect and remit sales taxes to states in which they do not have a physical presence are operating in a fair environment. 

“The AICPA urges Congress to revise the legislation to provide greater simplification, uniformity, and consistency,” Jeffrey A. Porter, chair of the AICPA’s Tax Executive Committee, wrote in his Sept. 10, 2013 letter to Congress. 

Porter emphasized that “the AICPA is not taking a position supporting or opposing” the Marketplace Fairness Act of 2013, which passed the Senate on May 6, 2013. 

The legislation is important to the accounting profession because many CPAs would either be employed by, or have as clients, the businesses that would be required to act as tax collection and remittance agents under the system the legislation would impose. 

Porter wrote to the chairmen and ranking minority members of the House and Senate Judiciary Committees, House Ways and Means Committee and Senate Finance Committee that the AICPA’s suggestions are offered as “a means to more easily attain the objectives of the legislation.”  He encouraged Congress, if it decides to proceed with the legislation, “to revise the legislation to address many of the concerns raised by its opponents, reduce compliance burdens on businesses, and encourage more sales and use tax uniformity among all the states.”

The bill is “not just about collecting tax,” Porter explained, “as it requires remote businesses to comply with many different jurisdictions’ rules.  The state and local sales and use tax system is very complicated with many of the 9,600 different state and local taxing jurisdictions having their own exemptions and methodologies.”

If Congress moves forward with the legislation, the AICPA suggested the following revisions to make it easier for remote sellers to comply with the collection and remittance provisions of the Marketplace Fairness Act of 2013:

• Substantially increase the existing small business exemption in the MFA and provide an additional state-level de minimis exemption;

• Allow remote sellers filing flexibility (i.e., temporary option of manual or electronic);

• Provide remote sellers stronger “hold harmless” penalty provisions and consider the appropriateness of amnesty for pre-MFA periods;

• Provide remote sellers a temporary special vendor compensation provision in addition to vendor compensation paid to all sellers required to collect and remit to the state; and

• Mandate more simplification (including the same filing option rules) in sales and use tax laws for all sales in and shipped into a state applicable to all businesses (both remote and in-state sellers) subject to collection and remittance obligations and provide greater clarity on taxable services and products.