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Marketplace Fairness: What Does It Mean For Exemption Certificates?

author photo of Silvia Aguirre

On May 6, 2013, the Senate passed the Marketplace Fairness Act of 2013 with a vote of 69 to 27. MFA is heading to the House of Representatives and the collection of sales tax by out-of-state sellers is closer to becoming a reality.  What does it mean for exemption certificates?  As it stands now, certificates are needed to cover tax exempt sales within states where your company has nexus. With the passage of the bill, you will have to collect a certificate from every tax exempt customer you sell to, regardless of whether you have nexus in that state of not. For some businesses, certificate collection just increased exponentially.

Depending on the state, specific exemptions apply for certain purchases.  Some exemptions are logical and transcend states, such as purchases by the federal government. Other purchases that appear to be exempt might not be, such as purchases by state and local agencies or exempt organizations.  These types of organizations are not exempt from sales tax in California, for example.

How do you know what laws apply in each state ― especially if you run a small business without a tax department? Do you understand when you need to collect a sales tax exemption certificate? How do you request, accept and store certificates? States have increased audits to ensure compliance and generate revenue in the slow economy. How will you respond if your company is audited? Just as there is software to assist in calculating and remitting sales tax, there is software for exemption certificate management. Marketplace Fairness is on the way and it’s a good idea to start looking for software that can accommodate your compliance needs now and scale to meet the needs of your company as it grows.

Note: Silvia Aguirre is no longer accepting new comments nor questions. More recent "Exemption Certificate Mgmt" posts by Michael Fleming (of Peisner Johnson) are still active. Also use the Site's SEARCH bar to locate other helpful information.

Other recent “Exemption Certificate Mgmt.” posts by Silvia Aguirre:

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

Comments

Note: Silvia Aguirre is no longer accepting new comments or questions.  More recent "Exemption Certificate Mgmt" posts by Michael Fleming (of Peisner Johnson) are still active.  Also use the Site's SEARCH bar to locate other helpful information.

1 Responses to Marketplace Fairness: What Does It Mean For Exemption Certificates?

  • Posted by Author photo of Susan JaegerSusan Jaeger on December 5, 2014 7:40am:

    While Silvia Aguirre’s very helpful Exemption Certificate blog information is still available – she is no longer posting new items or responding to new comments or questions.
    However – some good news… Andy Johnson and Michael Fleming of Peisner Johnson & Company have taken over the Exemption Certificate blogging activity. If you would like to post an Exemption Certificate related question – feel free to submit through the comment section in the newest/latest post(s) listed on this linked page.
    http://www.salestaxsupport.com/blogs/sales-use-tax/author/mikefleming/
    Thanks!
    SalesTaxSupport.com

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