Ever since the system of taxation has been introduced, governments and authorities have been trying to implement perfect policies. A variety of complexities like territorial rights, nature of transaction, type of commodity, etc. guide the taxation rate and policies.
The taxation system in the United States has undergone major changes over the course of years. A number of acts have been introduced and enacted to regulate the taxes. The taxes are also guided by the rulings of the U.S. Supreme Court in landmark cases. While this is one aspect of the taxation policy, it gets complicated when the bifurcation of state and federal taxation comes into picture.
The 2017 Sales Tax Guiding Forces
The year 2017 is likely to see changes in the sales tax regulations for online transactions because four legislations which are pending. If these legislations are passed, it would mean that companies might need to make changes in their existing Software that generates bills. For example, an update in the tax percentage in the Microsoft Dynamics AX. The legislations that might make changes in the 2017 online sales tax are:
- Marketplace Fairness Act (MFA) of 2015
- Remote Transactions Parity Act (RTPA) of 2015
- Online Sales Simplification Act (OSSA) of 2016
- No Regulation Without Representation Act of 2016
A lot of nuances are involved in each of these acts and the aim is to establish a percentage and conditions under which a state would be liable to collect sales taxes. However, an important consideration is that each of these acts have some provisions which need more clarity. In some cases, the provisions might contradict the existing laws and that is the prime reason why even if the acts are considered, enactment might be an issue.
The States’ Views
To understand how the four legislations might affect the sales tax, it is important to be aware of the current system in different states. Almost every state in the United States have a taxation policy in place and the acts discussed above might hinder with the policies in question. States like Florida, Alabama, South Dakota are already involved in legal cases or are in process of taking legal actions with respect to the taxation laws.
Amidst all the chaos pertaining to the views that states have on online sales tax and the contradictions within the provisions of the acts themselves, it is uncertain as to how these acts will finally affect the online sales tax regulations. Another major challenge would be to execute these laws at large scale. The retailers might have to make changes in their systems like Microsoft Dynamics AX or other Software to automate the online sales tax inclusion in all invoices.
With more than half of year gone by, it is unlikely that these acts will come into effect this year. But, the possibility of these being enforced by the first half of next year is strong. Share your opinion on these acts in the comments section below.