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The U.S. Senate, with the support of New Mexico’s Martin Heinrich and Tom Udall, recently passed legislation called the “Marketplace Fairness Act.” The idea behind the legislation is to set up a new taxation regime that would allow states to collect sales taxes on ALL online sales.
Currently, due to the US Supreme Court’s Quill decision of the early 1990s, online merchants must collect all sales taxes due if they have a physical presence in a particular state, but “mom and pop” merchants are not forced to act as tax collectors for the 9,600+ taxing jurisdictions throughout the United States. According to tables available online from New Mexico’s Tax and Revenue Department, there are 24 taxing districts in Bernalillo County alone and easily more than 100 statewide.
The complexity point is key because it is not that consumers do not owe taxes on online purchases, rather, the Court decided that the burden of forcing a small business to collect taxes at so many different rates with products defined differently, and with documentation required on a variety of schedules and in different formats, was unreasonable.
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