The True Simplification of Taxation Coalition (TruST) is a group representing the interests of American businesses in the fight to keep interstate commerce and competition free from unfair tax burdens. On September 25, 2013 TruST released a report on the cost of software integration for small and medium sized retailers under the Marketplace Fairness Act (MFA). Here are 7 things you should know about the report:

1. The report estimates that small to mid-size online or catalog merchants with 5-50M in annual sales will spend $80,000 to $290,000 on initial setup and integration costs, despite the “free” software
2. These same businesses will spend $57,500 to $260,000 on maintenance, updates, audits and service fees charged by software service providers each subsequent year.
3. Each state’s free software will likely not be sophisticated enough to handle the 2,000 to 30,000 distinct products these businesses sell, forcing them to pay Certified Software Providers (CSP) to aid in the process of collecting and remitting sales tax.
4. Software currently used by small and medium sized businesses for things like order entry, customer service, returns and refunds, inventory management and accounting would have to be made compatible to the CSP systems, often requiring significant architectural and integration work that can only be done by programmers familiar with the systems.
5. The integration of CSP software will likely cause increased ‘friction’ at check out, easily turning buyers away from completing their purchase.
6. These businesses often have between 2,000 and 30,000 unique items they would have to determine as taxable or non-taxable for 46 states. While CSPs will help with the tax rate look up, retailers will be responsible for the classification.  
7. The report estimates that the cost of reporting to small and mid-size online and catalog merchants will at least equal one-half of an additional full-time employee or at least $20,000.

The report concludes that as currently written the MFA would impose unfair burdens on small and mid-market online businesses, highlighting that first year costs could consume half if not all of the net operating margins of many of these companies. The TruST coalition hopes the report will result in a simple system for online retailers that closely resembles what brick-and-mortars are subjected to today.

To read the full report please visit the TruST website. To get more updates from the TruST coalition follow them on Twitter @TrueSimplify.