CompTIA Small Business Spotlight: IT SMBs Face New Interstate Tax Compliance Burdens
WASHINGTON, June 11, 2013 /PRNewswire-USNewswire/ -- The Marketplace Fairness Act (MFA) of 2013 would require businesses to collect and remit state sales taxes on sales of goods and services made into other states. While the Act contains a "small seller" exemption, this approach does not address the real concerns of small IT companies, according to CompTIA, the non-profit association for the IT industry.
In conjunction with National Small Business Week June 17-21, CompTIA is spotlighting issues affecting its small business members and offering solutions to address those challenges.
Overlapping state taxes have created an excessive compliance burden for companies like Secure Designs, Inc., a managed network services company in Greensboro, N.C.
"As with many small IT businesses, we provide goods and service into many states and this requires us to understand and be compliant with multiple state tax requirements," said Ron Culler, chief technology officer, Secure Designs.
In fact, Secure Designs provides managed internet security services and currently manages more than 6,000 firewall appliances in all 50 states.
Consider the case of just one customer: a managed services provider based in New Hampshire, but doing business in several states across New England.
"My customer, their customers and I are all based in different locations," Culler noted. "Who is ultimately responsible for collecting and remitting any required tax? Unless you have a lot of money to do research on every location in which you do business, you just have to struggle through it. The risk is a large, unexpected tax bill."
The proposed MFA takes a "one size fits all" approach, requiring every business to collect and remit state sales taxes on sales of goods and services made into other states.
"The legislation does not consider the size of the business and its ability to absorb these new compliance requirements; it only considers the gross amount of interstate sales," Culler said. "Rather than a small seller exemption, we believe that the exemption should apply to a small business.
"I support the position of CompTIA and TechVoice that the MFA should balance the rights of states to collect sales taxes with the ability of small businesses to cover these new compliance costs," Culler continued. "We certainly agree that we should pay taxes where our office and sales people reside, but requiring us to file sales tax returns with every state where we have a single customer is just too costly."
TechVoice is a partnership of the CompTIA, the Technology Councils of North America (TECNA), and participating regional technology associations. For more information, visit www.techvoice.org.