Wednesday could be the day Senate passes the Marketplace Fairness Act, forcing online retailers to collect sales tax for the state their merchandise is being shipped to, according to WashingtonPost. The online sales tax would only apply to businesses raking in annual revenue of $1 million or more, a mark many businesses fear.
Previously, states required retailers to collect taxes only if their business expanded to their state (i.e., if they had physical presence in that specific state). Now, the businesses would be responsible for collecting sales tax for every sell. It is estimated that state and local governments will see a jump in tax revenue of up to $11 million.
Affected businesses will have to invest thousands of dollars to incorporate systems and software that efficiently track and record all sales taxes. One business owner, Shannon Schmidt-Hidalgo, owner of Green Light Fire Bag, stated, “We’re meeting with our attorneys and CPAs as we speak to discuss budget cuts and analyze the financial forecast.”
While many large businesses dread the new law, small businesses embrace it, as it could potentially help their business grow. Small businesses (those who rake in under $1 million in annual revenue) will not be affected, appealing to out-of-state customers who prefer to purchase non-taxable merchandise.
Discuss your tax and financial concerns with our experienced accountants in McAllen of Gonzalez & Arrambide, Inc. at 956-447-9009 to ensure your business continues on the path to success. We offer financial planning services formulated to suit your business needs.