Currently, buyers are supposed to report Internet purchase taxes on their income tax filings but most do not. The Marketplace Fairness Act (MFA) would allow states to require all retailers, including “remote” retailers like Overstock.com, to collect and remit to states the sales and use taxes on customer buys.
Online sellers already are required to collect those taxes from customers in their own states, as Overstock.com does in Utah, and they must do so from out-of-state customers if they have a physical presence in the customer’s state. The MFA would allow states to force retailers to collect sales taxes on purchases in states where they have no physical presence. It would apply only to sellers with total sales of $1 million or more in annual sales in states where they have no physical presence.
But, for states to require that sales tax collection, they must meet certain tax simplification standards required by the MFA.
Without that simplification, companies face the prospect of dealing with more than 9,600 tax jurisdictions in the U.S. “It’s very difficult to collect a tax based on where the purchaser is,” Jonathan Johnson, executive vice chairman of Overstock.com’s board of directors said.
Most retailers now collect sales taxes at the point of sale — for example, a store in Fort Union charges a tax for the Fort Union jurisdiction — but the MFA would require collection based on a buyer’s location. The Enterprise
