Is Your ERP System Prepared for the Marketplace Fairness Act?

The Marketplace Fairness Act of 2013 (S.743) is a bill awaiting a vote in Congress that will require large online retailers to charge customers with state sales tax. If it passes and is signed by the president, it will significantly alter the way many online stores do business and strip away one of the advantages some say they have over brick and mortar shops. When it comes to accounting, many businesses may also be unprepared for such a change.

According to salestaxchanges.com, as many as 22 states could begin collecting online sales tax as soon as 180 days after the bill passes. These states are members of the Streamlined Sales and Use Tax Agreement, and may already collect sales tax from some online stores. Only five states (Alaska, Montana, New Hampshire, Oregon, and Delaware) do not collect statewide sales tax and will not be affected. The rest could begin some time next year.

If and when the bill does pass, only online stores above a certain financial threshold will be required to collect sales tax. In the past, stores have only been required to collect sales taxes when they ship items to states where they maintained a physical presence. It was too complicated to collect different amounts depending on the state and the goods sold for each state and then to calculate the total taxes collected at the end of the tax period. Now, modern ERP software may help make such transactions and the reports that follow easier.

The bill does have supporters, namely Amazon, Target, and the National Retail Federation. It has already passed the Senate, and President Obama has stated that he supports it. The only hurdle left is the Republican-controlled House.

Opponents include eBay and many conservatives who would rather not have smaller businesses that are still over the $1 million threshold, be forced into possibly purchasing more expensive accounting software to make the system work. For smart ERP vendors, this is an opportunity to provide businesses with an affordable solution.

Enter Microsoft Dynamics GP. Dynamics GP is a full featured yet affordable ERP/accounting software system that will help companies track these type of sales tax calculations. We recommend add on tools from Avalara for Microsoft Dynamics GP for easy tax management.

For more information on the current state of the MFA legislation and how it may impact your business, join our partner Avalara (the sales tax experts) on Thursday, June 13th at 1PM EST for an informational webinar: “The Sales Tax Landscape is Shifting… Are You Ready?”
You can also visit www.salestaxchanges.com for the most up-to-date information on where the bill stands, along with practical tips and answers to your most pressing questions.

By Anya Ciecierski, CAL Business Solutions, Microsoft Dynamics GP Partner Connecticut, www.calszone.com