Having read the text of the Marketplace Fairness Act (http://www.gpo.gov/fdsys/pkg/BILLS-112s1832is/pdf/BILLS-112s1832is.pdf), I do not think it should become law. It looks like it could create more problems than it will solve. Who will enforce it? IRS? FBI? What are the criminal penalties for not collecting the tax? Who will write those regulations? Even with the “simplifications” sellers will still have to track not only which states are a part of the “Streamlined Sales and Use Tax Agreement” but also those that implement the “minimum simplification requirements.” Who will certify which states are in compliance? The bill mentions tax rates, but does not seem to address which items and/or services are covered. Every state has its own arcane rules for what is taxed and what is not (groceries have notably convoluted rules), and when (some states have sales tax “holidays” or exemptions during times of emergency; the bill requires a 30-day notice of change to occur on a calendar quarter, which would eliminate the ability to react to emergencies). It requires that the states provide “adequate software and services” but does not require member states to follow the same standard formats and protocols. In the same vein, each state is to provide “certification procedures” for the software but not necessarily the same procedures for each state, nor does it prevent the states from charging for said certification. What I see happening is smaller players will be compelled to use one of the larger providers (like Amazon, eBay, or Google) rather than doing it themselves; either way it will cost them to comply (either through the added complexity in their own systems or paying a surcharge to a provider). So the customer will see the price increase by more than just the tax. Now, there is a “small seller exception” in the bill based upon an arbitrary figure of $500,000, which looks a bit like an afterthought and will have to be revisited over time lest sellers eventually no longer be considered “small” even without growth. Anytime I see such exceptions it tells me it cannot be a good piece of legislation: if it is not good for everyone, it is good for no one.

The only way I would support something like this would be if every state that chose to be a part of it agreed to the same tax rate on the same products and/or services (which would likely never happen), if there were a common software interface, if payments were paid to a single source (ideally one’s home state, who will take care of paying the other states), and if enforcement is only at the state level.