Comparison of the REMOTE TRANSACTIONS PARITY ACT and ONLINE SALES SIMPLIFICATION ACT

RTPA vs. OSSA – Purchaser’s Perspective Will purchasers be subject to new taxes? RTPA (Chaffetz) OSSA (Goodlatte) No. Under the RTPA states are just being given the authority to require remote sellers to collect the use tax that purchasers already legally owe. Yes. Purchasers in non-sales tax states will be required to pay sales taxes to remote sellers located in participating sales tax states (today these purchasers legally owe no sales tax on these transactions).

11/15/2018

11/15/2018

RTPA vs. OSSA – Purchaser’s Perspective If a remote seller does not collect the proper amount of tax due to the destination state at the time of the sale, are individual purchasers still generally required to pay the use tax? RTPA (Chaffetz) OSSA (Goodlatte) No. If the purchaser paid a tax collected by the remote seller, the destination state may not impose any additional tax. Yes. The tax is still legally due and owing.

RTPA vs. OSSA – Purchaser’s Perspective Will purchasers be subject to different exemptions based on the location of the remote seller? RTPA (Chaffetz) OSSA (Goodlatte) Yes. Remote sellers will apply the exemptions that are based on their origin state. No. The same exemptions will apply regardless of the location of the seller.

RTPA vs. OSSA – Purchaser’s Perspective Will the same purchaser be subject to different rates on purchases of the same product from different remote sellers? RTPA (Chaffetz) OSSA (Goodlatte) Yes. Remote sellers will apply the rate based on their origin state. No. The same destination rate will apply regardless of where the remote seller is located.

Other OSSA Concerns – Purchaser’s Perspective Personal information provided to clearinghouse Refunds – which state has jurisdiction and who does purchaser go to for refunds?

RTPA vs. OSSA – Retailer’s Perspective Will the same sourcing rules apply to all transactions? RTPA (Chaffetz) OSSA (Goodlatte) No. Origin-based sourcing rules will apply to remote sales but the destination-based hierarchy will apply to non-remote sales. Yes. The same destination-based sourcing hierarchy will apply to all transactions.

RTPA vs. OSSA – Retailer’s Perspective Are retailers provided any protections if sales tax is not properly charged? RTPA (Chaffetz) OSSA (Goodlatte) No protections are provided for failing to collect the proper tax. Yes. For sellers that use a CSP the CSP is generally liable for errors made in calculating and collecting the tax.

RTPA vs. OSSA – Retailer’s Perspective Is the tax on a remote sale based on a single state’s tax base? RTPA (Chaffetz) OSSA (Goodlatte) No. The tax is generally based on the origin state’s laws and rules but could be modified by the exemptions in the destination state for which there is a “compliant purchaser certificate”. Yes. The tax is generally based on the destination state’s laws and rules.

RTPA vs. OSSA – Retailer’s Perspective Do all remote sellers collect the same amount of tax on a transaction with the same purchaser regardless of which state the remote seller is located? RTPA (Chaffetz) OSSA (Goodlatte) No. The tax is generally based on the origin state’s laws and rules. Yes. The tax is generally based on the destination state’s laws and rules regardless of where the remote seller is located.

RTPA vs. OSSA – Retailer’s Perspective Are remote sales subject to a single rate per state? RTPA (Chaffetz) OSSA (Goodlatte) No. Remote sellers apply the rate of the origin state plus the rate of the origin locality. Different remote sellers within a state may be charging different rates depending on their origin locality. No – but sellers are provided the option to use CSPs at no charge to calculate, collect and remit in those states whether they are a “remote seller.”

RTPA vs. OSSA – Retailer’s Perspective Are remote sellers provided software or other help to comply with this proposal? RTPA (Chaffetz) OSSA (Goodlatte) No. Sellers must take care of the additional reporting requirements, and gathering and maintaining the additional information necessary to prove which sales are remote sales on their own. Yes. Sellers are provided free access to use CSPs to calculate, collect and remit in those states whether they are a “remote seller.”

Other OSSA Concerns – Retailer’s Perspective Does not result in parity at point of sale Advantage for remote sellers in non-participating states Destination rules apply to some transactions and origin rules apply to other transactions “Origin state” can change every year

RTPA vs. OSSA – State’s Perspective Does the amount of tax legally due on a remote sale remain the same before and after the legislation? RTPA (Chaffetz) OSSA (Goodlatte) No. In many cases, purchasers will be required to pay more tax than they owe today. In other cases it will be less, which means the state will lose those revenues. Purchasers will figure out who to make their purchases from to legally reduce the taxes they owe. Yes. States are just being given the authority to require remote sellers to collect the tax at the time of the sale.

RTPA vs. OSSA – State’s Perspective Does the state receiving the tax revenue determine the taxability of goods and services? RTPA (Chaffetz) OSSA (Goodlatte) No. The origin state determines the taxability, but the destination state receives the revenue. Yes. The destination state determines the taxability of the goods and services.

RTPA vs. OSSA – State’s Perspective Does the state receiving the tax revenue set the tax rates? RTPA (Chaffetz) OSSA (Goodlatte) No. The origin state determines the tax rate. Yes. The tax rate is based on the destination states laws.

RTPA vs. OSSA – State’s Perspective Can states keep the existing structure of their sales and use tax imposition provisions? RTPA (Chaffetz) OSSA (Goodlatte) Not all. Some states will need to change their imposition statutes to impose the tax on the seller rather than on the purchaser. Yes.

RTPA vs. OSSA – State’s Perspective Do the state's remote sellers compete under the same tax rules as non-remote sellers after the legislation? RTPA (Chaffetz) OSSA (Goodlatte) No. Only remote sellers located in participating states and non-sales tax states would be required to collect and remit the tax (or provide other information). Yes. All sellers would be required to collect tax based on the destination state’s laws.

RTPA vs. OSSA – State’s Perspective Does the legislation discourage the formation of tax haven states? RTPA (Chaffetz) OSSA (Goodlatte) No. Non-participating states and states with very low tax rates will likely attract remote sellers from other states. Yes. All sellers would be required to collect tax based on the destination state’s laws regardless of where the seller is located.

RTPA vs. OSSA – State’s Perspective Can states audit remote sellers that are fraudulently failing to collect the proper sales tax for their respective states? RTPA (Chaffetz) OSSA (Goodlatte) No. Only the origin state can pursue the fraudulent sellers. Yes. States can pursue remote sellers that are fraudulently failing to collect their tax.

Other OSSA Concerns – State’s Perspective Participating states putting own state’s remote sellers at competitive disadvantage compared to remote sellers located in non-participating states Tracking of tax by zip code (about 43,000) and then having to redistribute to clearinghouse How to distribute portion of receipts received from clearinghouse to local governmental units NOMAD states have to implement system NOMAD purchasers now required to pay sales tax

Other OSSA Concerns – State’s Perspective Definition of “physical presence” Additional resources to process “compliant purchaser” applications Auditing in-state remote sellers for other states Personal information required to be retained by clearinghouse