Spending as much time as we do here at TaxJar eating, sleeping and breathing sales tax, we have a few predictions about our favorite topic for 2015. You’re invited to check out our predictions and leave some of your own in the comments.
1.) Another Internet Sales Tax Bill Will Appear – The Marketplace Fairness Act is dead, but we predict the idea of Internet sales tax won’t stay dead for long. The underlying problem that fueled the idea – states running low on revenue – still persists. One Congressman has already floated the idea of the Remote Transaction Parity Act (RTPA), and claims that it eliminates some of the problems the Marketplace Fairness Act would have created for merchants. No bill has been introduced yet, but we bet it’s coming in the next Congressional session.
2.) States Will Follow in Michigan’s Footsteps – Earlier this month, the legislature of the state of Michigan passed a bill clarifying that actions like storing items in a warehouse or contracting with installers or repair personnel would create nexus in the state. Governor Rick Snyder is expected to sign the bill into law soon. The bill’s stated mission was to collect billions in sales tax from larger retailers like Amazon and Overstock, but could affect smaller retailers, too. We expect to see other states follow in Michigan’s footsteps.
3.) The Michigan Nexus Law Will be Appealed in the Courts – That said, the Michigan sales tax law will almost certainly be challenged in the courts. We’ll keep a close eye on developments there.
4.) States Will Try Even More Creative Methods to Collect Sales & Use Tax – Michigan isn’t the only state attempting to collect more sales and use tax owed. Colorado recently attempted to require remote merchants who sell to buyers in Colorado to report those sales. The state in turn planned to use those lists to collect use tax (tax on goods bought out of state) from residents. This measure is also tied up in the courts, but it proves that states will go to great lengths to find sources of revenue.
5.) States Will Attempt to Become More Streamlined and Tech Savvy – Don’t laugh! Arizona has attempted to streamline their transaction privilege tax (TPT – their equivalent of sales tax) and the state of South Carolina is updating their Department of Revenue website to be more modern and user friendly. We predict (and hope) other states will try to be more user-friendly as one way to encourage merchants to collect and remit sales tax.
6.) More Sellers Will Use 3rd Party Logistics – It’s now easier than ever for online sellers to streamline their processes and use services like 3rd party logistics and drop shipping. We predict this trend with eCommerce sellers will only increase as more of the world shops online.
7.) Sales Tax for FBA Sellers Will Become More Complex – FBA sellers (and other 3rd party sellers) already have a complex sales tax burden. With states getting creative, plus Amazon building fulfillment centers in more states, we predict that FBA sellers will find themselves with more sales tax complexity in 2015. This includes the need to register for a sales tax permit in even more states, as Wisconsin, Illinois and Massachusetts prepare to welcome Amazon fulfillment centers.
8.) All Online Businesses Will Become Even More Complex – And that means they’ll have more complex sales tax burdens. Even if online seller don’t choose to use 3rd party logistics or drop shipping, it’s still easy to sell on multiple channels or even in-person through point-of-sale devices like the Square reader. As it becomes easier for online business owners to create multiple revenue streams, their sales tax burdens will become more complex.
9.) We’ll Hear More about States Enforcing Sales Tax Collection on Remote Sellers – We published a letter earlier this year from an out-of-state Amazon seller who received a sales tax enforcement letter from the state of Pennsylvania. We’ve also seen examples of Virginia and Texas attempting to enforce compliance on remote sellers. We predict more of the same in 2015 as states continue to look for revenue sources.
10.) More Accounting Pros will Specialize in Sales Tax – As evidenced by the chatter on our Sales Tax for eCommerce Sellers Facebook group, more and more CPA’s and EA’s are recognizing the need for sales tax expertise. We predict that more financial professionals will specialize in this niche in 2015.
That’s it for our predictions. How about yours? What do you foresee taking place in the sales tax world in 2015?
