The Marketplace Fairness Act of 2013 (MFA) was passed by the U.S. Senate on May 6, 2013 , with prediction from political observers that the Act would be passed in the House within weeks or even months. According to the White House, the tax is expected to level the field for retailers of small-business. The tax is also expected to profoundly impact merchant level salespeople (MLSs) and Independent Sales Organizations (ISO).
The Marketplace Fairness Act (MFA) would expect the collection of state sales tax by online retailers. Currently these retailers either lack the technological know-how of determining which sales taxes are applicable to each sale. Should the act be passed into law, the collection and remittance by retailers would be expected within the stated law.
The Marketplace Fairness Act (MFA) is expected to bring about the emergence of real time tax providers, who would provide retailers with the required tax on a sale by sale basis. Even thou the act is yet to be passed into law. Processors are already laying the ground work for its implementation, in terms of the new fees that would be associated with online tax processing.
With Marketplace Fairness Act (MFA) there is a percentage payable to the intermediaries that end up collecting them. With online businesses usually transacting in huge volumes, any percentage being offered stands the chance of being a big payout. There are currently only six licensed tax intermediaries in the United States.
should the Act be passed in its current state, every online sale would be expected to provide the information such as buyer’s location, sale price, seller’s location, time of sale and Goods sold in order for the intermediary to make the requested tax query, hence fetching the applicable tax. Under this proposed act, it would be the Marketplace Fairness Act (MFA) intermediary responsibility to keep the individual merchant’s record of levied tax. At month’s end, it would be the intermediary duty to process the tax payable from the merchant’s account and subsequently remit it to the respective state.
There is already a rush between the various processors, ISOs and acquiring banks for the revenue that’s likely to be generated by the MFA tax look-up intermediaries. The Act presents an opportunity to become a reseller in the likely chain that’s bound to crop up between the merchant and the intermediary.
The MFA presents all new merchant revenue on basis points pegged against the overall processing points. This business model would propel “forward thinking” to business entities to start providing MFA opt-in in preparation for the passing of the Act to Law.
Acquiring banks are therefore advised to capture the business opportunity that would be brought by The Marketplace Fairness Act (MFA). This business opportunity is likely to present itself in areas of both commercial and technical integration with ISOs.
Attorney at Law, Adam Atlas. “The Green Sheet Online Edition Table of Contents.” The Green Sheet. The Green Sheet Online Edition, 10 June 2013. Web. 27 June 2013.