The Fair Tax Act, Part XXIX
Continuing on with filing requirements for businesses:
`(c) Extensions for Filing Reports-
`(1) AUTOMATIC EXTENSIONS FOR NOT MORE THAN 30 DAYS- On application, an extension of not more than 30 days to file reports under subsection (a) shall be automatically granted.
`(2) OTHER EXTENSIONS- On application, extensions of 30 to 60 days to file such reports shall be liberally granted by the sales tax administering authority for reasonable cause. Extensions greater than 60 days may be granted by the sales tax administering authority to avoid hardship.
`(3) NO EXTENSION FOR PAYMENT OF TAXES- Notwithstanding paragraphs (1) and (2), no extension shall be granted with respect to the time for paying or remitting the taxes under this subtitle.
`(d) Telephone Reporting of Violations- The Secretary shall establish a system under which a violation of this subtitle can be brought to the attention of the sales tax administering authority for investigation through the use of a toll-free telephone number and otherwise.
`(e) Separate Segregated Accounts-
`(1) IN GENERAL- Any registered seller that is not a small seller shall deposit all sales taxes collected pursuant to section 103 in a particular week in a separate segregated account maintained at a bank or other financial institution within 3 business days of the end of such week. Said registered seller shall also maintain in that account sufficient funds to meet the bank or financial institution minimum balance requirements, if any, and to pay account fees and costs.
`(2) SMALL SELLER- For purposes of this subsection, a small seller is any person that has not collected $20,000 or more of the taxes imposed by this subtitle in any of the previous 12 months.
`(3) LARGE SELLERS- Any seller that has collected $100,000 or more of the taxes imposed by this subtitle in any of the previous 12 months is a large seller. A large seller shall remit to the sales tax administering authority the entire balance of deposited taxes in its separate segregated account on the first business day following the end of the calendar week. The Secretary may by regulation require the electronic transfer of funds due from large sellers.
`(4) WEEK- For purposes of this subsection, the term `week’ shall mean the 7-day period ending on a Friday.
Now this is actually done in several states already. The idea of a large business (like Wal-Mart) paying its sales tax each week is not a hard thing to accomplish with electronic transactions.
So, let me see if I’ve got it right. Large sellers have to deposit all taxes collected this week into a separate segregated account by next Wednesday. But all funds in the account have to be cleaned out next Monday. It seems to me that minimum balance requirements may become a significant cost consideration for businesses. I sure hope the 1/4 of 1% fee will cover these types of expenses, including the security requirements which will be covered in (g) below. What does a surety bond cost a big box like Wal-mart who will collect millions in taxes each week?
This is similar to how some states do sales taxes for large companies (primarily to keep things electronic, avoid human errors and to create government cash flow).
For an example of how a state does it, take a look at Missouri:
http://www.dor.mo.gov/tax/business/sales/efilereq.htm
Basically Wal-Mart and others in this category are probably already doing this in many states and it probably won’t be creating any great new obstacles for them to overcome (it’s just one more bank account to them).