Congress’ Newest Attempt to Legislate Over Quill

Reed Smith

Recently, the Remote Transactions Parity Act of 2015 (“RTPA”; H.R. 2775) has been introduced to the House Committee on the Judiciary. Its introduction was due to Representative Jason Chaffetz’s (R-UT) promise to replace the Marketplace Fairness Act (“MFA”; died as H.R. 684; reintroduced in the Senate this year as S. 698), to the National Conference of State Legislatures when he spoke to it in December 2014.

In general, the RTPA allows states to impose sales tax on out-of-state vendors if the state is either a member of the Streamlined Sales and Use Tax Agreement or, alternatively, implements the “minimum simplification requirements” of the RTPA. Such requirements include destination sourcing; a uniform sales tax base within the state; a single administrative entity, audit, and return per state; and relief from errors made in reliance on certified software or the states.

In contrast to the MFA’s federal exemption for sellers making less than $1M from state enforcement; the RTPA phases in with $10M, $5M, $1M exemptions each successive year, and eliminates the exemption entirely in the fourth year. However, the RTPA also prohibits audits of registered remote vendors with less than $5M of sales unless there is “reasonable suspicion” of intentional misrepresentation or fraud – perhaps introducing Fourth Amendment jurisprudence to such audits. It also prohibits the use contingent fee auditors.  Finally, states may not tax under RTPA until it has certified “multiple national certified software providers,” although the numerously of “multiple” is not defined.

This blog has covered the saga of federal sales tax legislation (for example, here), as well as its sometimes bizarre influence on state legislation (here, here, here, and here). We look forward to covering what happens next.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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