Jun 22, 2015
From KPMG TaxWatch
In mid-June, Representative Jason Chaffetz introduced H.R. 2775, the Remote Transactions Parity Act of 2015 (RTPA or Act), in the U.S. House of Representatives (House). The RTPA would allow states to require remote sellers to collect and remit sales and use taxes on sales to in-state customers under certain conditions. While the Act is similar to the Marketplace Fairness Act (MFA) of 2015 introduced earlier this year in the House, and to the Marketplace Fairness Act of 2013which passed in the Senate), there are several key differences and additions. As with the MFA, the RTPA provides two ways for states to earn the ability to tax remote sellers for in-state sales. States may either become members of the Streamlined Sales and Use Tax Agreement (SSUTA) or implement certain sales tax simplifications and protections for remote sellers and certified software providers.
As with other remote-seller bills, the RTPA provides for an exception from any collection requirements for “small sellers.” However, the RTPA’s definition of who qualifies as a small-seller changes over the first three years the Act is effective. Under the RTPA, a small seller is a seller with gross annual receipts of less than $10 million in the first year, and $5 million in the second year, and $1 million in the third year. In the fourth and subsequent years, there is no small seller exception. The RTPA’s small-seller exception specifically excludes sellers using electronic marketplaces and provides that such sellers are subject to any collection requirements a state may impose.
With respect to tax administration and audits, the RTPA provides that states cannot audit remote sellers with less than $5 million in gross annual receipts that are registered with a central registration system provided for in the Act. Additionally, the RTPA restricts states’ audits of remote sellers to the previous three years and prohibits the use of contingent fee audit of remote sellers. The RTPA contains additional details regarding “certified software providers” requirements that the MFA and previous bills do not. The RTPA makes clear that a state cannot impose collection requirements on remote sellers until it has certified multiple software providers that are also certified in all other states seeking to impose collection duties. It also requires that states pay all costs associated with a remote seller’s use of such certified providers, including installation, setup and maintenance.
For more information on the Remote Transactions Parity Act of 2015, H.R. 2775, 114th Cong. (1st sess., introduced June 15, 2015), please contact Harley Duncan at 202-533-3254 or Lindsay McAfee at 202-533-6736.
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The following information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.
The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.