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Marketplace Fairness Act – Next Step or No Step? Update & Resources

author photo of Sylvia F. Dion

Ah, the Marketplace Fairness Act of 2013! A lot has been said about it since its passage by the U.S. Senate on May 6th. Why it should or shouldn’t be passed, who's backing it and who's opposing it, its potential impact on those "smaller" online sellers (the ones just big enough to not qualify for the small-seller exception) - heck, we even heard the viewpoint of prominent economist, Arthur Laffer.

Yep, there’s been no shortage of “discussion” on the Marketplace Fairness Act of 2013. (Let’s just say, there’s been a real “media frenzy” – with reports ranging from accurate and in-depth to good ole' mud-slinging "he said - she said" rhetoric.)

But what has happened with the Marketplace Fairness Act of 2013? What is the bill’s status? Is it going anywhere? Is there anything real happening right now?

The Current Status of the Marketplace Fairness Act of 2013, S. 743

As we all know, the Marketplace Fairness Act of 2013 (“MFA”), S. 743, was passed on May 6th by an overwhelmingly majority of the Senate. The bill was then referred to a subcommittee of the House Judiciary Committee chaired by Representative Bob Goodlatte (R-VA). More specifically, it was referred to the Subcommittee on Regulatory Reform, Commercial and Antitrust Law, which has jurisdiction over state taxation matters affecting interstate commerce, as well as several other areas.

This is significant because Chairman Goodlatte has publicly stated his disagreement with S. 743 as it reads currently and his opinion that the proposal needs work. Incidentally one of those “media frenzy” stories that hit the wires back in June centered on Chairman Goodlatte's purported statement that the proposal was dead - supposedly due to a barrage of messages he had received. The media was soon falsely reporting that the Chairman had killed the bill, only he hadn’t! And although the Chairman acted quickly by issuing a statement to correct the false reports, he stated once again that he had "serious concerns regarding the Marketplace Fairness Act passed by the Senate" making it clear that the proposal would face much more scrutiny in the House.

But when will the House act on the MFA?

Well, there’s a chance we’ll be hearing more in the coming days. You see, the U.S. Congress, which has been on summer recess since August 3rd, reconvened in Washington D.C. today, September 9th. And keep in mind that although Congress had been absent from the Capital this past month, this simply means that the legislators were back home in their districts – and likely meeting with constituents, i.e., taxpayers who either want to see the proposal pass…or fail!

Even if we learn that the House has agreed to consider the proposal, it could still be a while before we know more. In one of my prior posts, I explained how Congressional committees are like “mini Congresses” and, as most bills never receive any committee consideration, are never reported out. Also, internal committee discussions are generally not made public, therefore, much may not be known until a bill is “reported on.” Still, given the high profile of the MFA, it seems likely that the Judiciary Committee will announce some type of action, e.g., a hearing, now that Congress has reconvened.

But here's one more point that I just have to address. Since the start of the 113th Congressional session (which began on January 3rd), there have three separate MFA proposals, all which go by the same "Marketplace Fairness Act of 2013" title. I reported on the first two proposals, S. 336 and H.R. 684 shortly after they were introduced. (See my March 18th post, "Marketplace Fairness Act 2013: New & Improved from MFA 2012?") Then, in April, the Senate re-introduced the MFA in a new bill, S. 743. This new bill, which initially read identically to S. 336/H.R. 684, was introduced in order for the Senate to circumvent the usual committee and debate process and move the bill to a full Senate vote as quickly as possible, which is exactly what happened. (I talk about this in my May 10th post, "Marketplace Fairness Act: The Issues No One is Talking About." Also see my article, "The Marketplace Fairness Act of 2013: Will Congress Finally Enact Federal Remote Seller Legislation", IPT Tax Report, June 2013)

I've noticed that the media still makes references to both S. 336 and H.R. 684. But effectively, nothing will ever happen with S. 336, since the Senate has already passed a Senate version of the MFA - S. 743. On the other hand, there could still be activity related to the House version of the MFA, H.R. 684. As I point out in my March 18th post, each bill is procedurally a separate proposal. This means each proposal could be considered first within the chamber that introduced that bill, could end up with different sets of amendments and then, could move over to the other chamber. (This is what has occurred with S. 743 - it was introduced in the Senate, amendment, passed and then referred to the House.) And although S. 743 has already been passed by the Senate, technically, the House could take up and amend it's own proposal, H.R. 684, as opposed to addressing the Senate version, S. 743. Of course, only one proposal would need to be enacted for the MFA to become law.

When it Comes to the MFA - We've Got You Covered

Ah, the Marketplace Fairness Act of 2013. What will happen next? Well, as I said a minute ago, we may know more now that Congress has reconvened. And as new developments happen, we'll keep you covered. Not only will I continue reporting on MFA legislative developments in my role as the Internet Tax/e-Commerce blogger, but because the MFA impacts several sales tax areas, you'll find our many wonderful contributors covering aspects of it too.

For instance, as Noel Hamm, one of our sales tax automation bloggers points out in his recent post, "Is the MFA’s Free Software – Really Free? (3 Key Considerations)", remote sellers will need to carefully evaluate their sales tax automation needs and understand all the costs involved.

And what about exemption certificates? If the MFA passes, there will certainly be an elevated focus on this area, as pointed out by exemption certificate management blogger, Silvia Aguirre, in her recent post, "Marketplace Fairness: What Does It Mean For Exemption Certificates?"

Also, if there's a sales tax issue that has policy implications, it's enacting a Federal solution to a State issue. Which is why you'll also find our sales tax policy blogger, Professor Annette Nellen, addressing MFA policy questions, such as in her recent post, "Marketplace Fairness: Small Seller Exception Definitional Flaws."

But even if the MFA passes, this doesn't mean nexus will no longer be an issue. On the contrary! Because the MFA has a preemption clause, states will not be required to adopt the MFA. As our sales tax nexus blogger, Jerry Donnini, points out in his recent post, "Internet Tax Foes Watch MFA – As 3 States Pass Affiliate Nexus Tax", keeping tabs on expanding nexus developments will continue to be important.

Later this week, I'll be writing a new post on some significant behind the scenes work of the Streamlined Sales Tax Governing Board (SSTGB) and its Federal Legislation Implementation Committee. As I'll point out in my next post, because the SSTGB is taking a proactive role in helping states to understand and implement the MFA, it will become extremely important to keep tabs on SST developments. As our SST blogger, Cory Barwick, points out in his recent post, "Streamlined Sales Tax: Will Ohio Go For $20 Million Carrot?," there may soon be 23 full-member SST states, which means 23 states whose sales & use tax systems will effectively already be in compliance with the MFA and ready to exercise their collection authority on remote sellers.

By the way, to stay on top of the MFA issue, simply click this blog's RSS subscription feature (as well as the "Subscribe to this feed" option on the page that opens). You'll then receive a notification whenever new content is added to the SalesTaxSupport.com blogs. (And BTW - you are invited to post questions or comments following any of the posts.)

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If you are still reading, you obviously have an interest in this topic...

Did you know...

I’ve been covering the Marketplace Fairness Act of 2013 here at SalesTaxSupport’s Issues, Insights and Ideas blog this entire year? If you missed any of my prior MFA blog articles, you can access them all under the “Other recent Internet Tax / E-Commerce posts by Sylvia F. Dion” section below.

In addition to covering the MFA, I’ve also been covering Internet Sales Tax issues and developments (e.g., all of the prior Federal Internet Sales Tax Proposals, State Amazon laws) for SalesTaxSupport since July 2011. You can see a full list of my Internet Sales Tax blog articles, as well as my short bio, at my Contributor Page.

I’ve also recently expanded my blogging responsibilities here at SalesTaxSupport and blog about U.S. Sales Tax for Foreign Sellers.

What's up next? A post on significant "behind the scenes" work of the SST's Federal Legislation Implementation Committee.

And finally, if you have questions, comments, suggestions…I would love to hear from you!

About the Author: Sylvia F. Dion, MPA, CPA, is the Founder and Managing Partner of SALT Consulting firm, PrietoDion Consulting Partners LLC. Sylvia has been covering Internet Sales Tax developments for SalesTaxSupport’s Issues blog since 2011. Sylvia is also the “U.S. Sales Tax for Foreign Sellers” contributor for SalesTaxSupport’s Industry blog and the “Massachusetts Sales Tax” contributor for SalesTaxSupport’s State blog. You can follow Sylvia on twitter and on Google+ and can contact Sylvia via e-mail at sylviadion@verizon.net or at 978-846-1641.

Other recent “Internet Tax / E-Commerce” posts by Sylvia F. Dion, CPA:

NOTE: All blog content, comments, and participation subject to disclaimer at bottom of page.

Comments

3 Responses to Marketplace Fairness Act – Next Step or No Step? Update & Resources

  • Posted by Author photo of Sylvia F. DionSylvia F. Dion on September 13, 2013 2:51am:

    Readers and friends, As you know, the above post was published this past Monday, September 9th. Now that Congress has wrapped up its first week back from its summer recess, indications are that House Judiciary Chairman Goodlatte may soon be releasing a "statement of principles" that will detail his approach to the legislation. Although there is no definite on what the "statement" might include or its impact, this could be signal that the House is finally ready to address the MFA.

  • Posted by Diane on September 11, 2013 1:13pm:

    Sylvia,
    Thanks for a great summary of what has happened. It has been interesting. And any potential actions in the House will bring even more discussions out - which I look forward to. I actually serve on the SST MFA Implementation Committee and in particular the FAQ Workgroup. We've been working for a few months now on coming up with FAQ to address likely questions from all different perspectives - the SST states, non-SST states, businesses and consumers. We're getting closer every week. So if you hear of any questions, please pass them on and I can see if we've got them covered. Our goal will be wide distribution of the FAQ's if/when MFA passes. I'll be sure you and Sales Tax Support are on the distribution list!

    • Posted by Author photo of Sylvia F. DionSylvia F. Dion on September 13, 2013 6:19am:

      Diane, Thanks for the kind comment!! I've been following the progress of SST's Federal Legislation Implementation Committee FAQ Workgroup and can tell that your Workgroup has been working hard to consider the many questions that the various parties might have. When I wrote the post above, it originally covered both my update and the work of the SST FAQ Workgroup. But because our esteemed editor and I both felt that each topic was deserving of its own post, I broke the topics into two posts. My next post on the SST's progress will be published early this next week and I will make sure to invite readers to submit questions that they believe should be addressed to you or whomever you designated at the SST. And you're right, I believe we'll be hearing more soon now that Congress is back in session.

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