Main Street Fairness Act Draws Amazon Support, eBay Opposition

Online Retailer Tax Bill Introduced by Senate

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Main Street Fairness Act Draws Amazon Support, eBay Opposition
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On Friday, Senate Democrats introduced the “Main Street Fairness Act” again. It was also introduced in in the House by Rep. William Delahunt (D-MA) during the last session of Congress.

Essentially, the bill calls for a federal set of guidelines for how states should collect taxes from online retailers. This has been a hot button issue lately. It blew up recently as Amazon and others shut down affiliate programs in California to avoid taxes, causing harm to small businesses who had relied them.

Amazon and eBay have presented opposing views to such a bill. Amazon is supporting it, while eBay says it will harm small retailers. PCMag shares the following statement from Brian Bieron, eBay’s senior director, of federal government relations and global public policy:

“A collection of state tax commissioners have again been able to get an outdated Internet sales tax bill introduced in Congress, but we are confident that it will be rejected because it would harm small Internet retailers. Better policy is reflected by H.Res. 95 from Congressman Dan Lungren (R-CA) and Congresswoman Zoe Lofgren (D-CA) with 27 bipartisan co-sponsors, which says that Congress won’t give states ‘the authority to impose unfair tax collecting requirements on small online businesses.'”

“The giant retailers jockeying for new Internet sales taxes have national store networks that they combine with their major online sales platforms, a business model they know brings some tax collection duties. Forcing small businesses to take on the same costs and tax burdens as national retail businesses is unrealistic, unfair and will unbalance the playing field between giant retailers and small business retailers on the Internet.”

The House bill says states would be authorized to “require all sellers not qualifying for the small seller exception to collect and remit sales and use taxes with respect to remote sales sourced to that Member State under the Agreement.”

In Section 3 of the bill, as presented in the House of Representatives, it says Congress makes the following findings:

(1) States should be encouraged to simplify their sales and use tax systems.

(2) As a matter of economic policy and basic fairness, similar sales transactions should be treated equally, without regard to the manner in which sales are transacted, whether in person, through the mail, over the telephone, on the Internet, or by other means.

(3) Congress may facilitate such equal taxation consistent with the United States Supreme Court’s decision in Quill Corp. v. North Dakota.

(4) States that voluntarily and adequately simplify their tax systems should be authorized to correct the present inequities in taxation through requiring sellers to collect taxes on sales of goods or services delivered in-state, without regard to the location of the seller.

(5) The States have experience, expertise, and a vital interest in the collection of sales and use taxes, and thus should take the lead in developing and implementing sales and use tax collection systems that are fair, efficient, and non-discriminatory in their application and that will simplify the process for both sellers and buyers.

(6) Online consumer privacy is of paramount importance to the growth of electronic commerce and must be protected.

The whole House Bill can be read here. Information regarding the Senate Bill is here, but the full text is as of yet unavailable.

Main Street Fairness Act Draws Amazon Support, eBay Opposition
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  • SRW

    There is a simple solution: TaxCloud (http://taxcloud.net).

    The statements by Ebay in the article confuse me. My company currently uses a PayPal checkout button that works with TaxCloud’s service so my business (with less than $50k in annual sales) already calculates, collects and remits sales tax for any jurisdiction in any state. It is simpler in most cases for my business to calculate and remit sales tax than to deal with shipping.

    If my business can manage to collect the legally due sales tax for my customers, why is it so hard for Ebay?

    Technology available freely on the internet (like taxcloud) is more than capable of handling sales tax calculation and remittance. Sorry everyone, the “too burdensome” argument carried merit in 1967 and in 1992 (when SCOTUS last ruled on this matter), but in the era of modern computing where Ebay maintains a dominant position, multijurisdictional sales tax calculation and remittance is easily accomplished.

    So what is the real reason Ebay chooses to evade supporting your schools, hospitals, infrastructure, libraries, parks and so much more?

  • http://www.towergem.com xiangdiloveties

    really bad news for small sellers online

  • http://www.ipgmr.com Gary Hornibrook

    It might seem like the right thing to do, that is, require internet retailers to collect and remit sales taxes just like the local brick-and mortar stores in our neighborhoods and towns. But be careful what you ask for, you just might get it. Cash strapped states, as well as hopeful counties and cities alike, are looking to tap into the billions of dollars of sales tax revenue they believe they are owed on internet and mail-order sales delivered to customers their states (“Main Street Fairness Act Draws Amazon Support, eBay Opposition”).

    States already have a means of collecting those taxes, it’s called the use tax. Every state that has a sales tax also imposes a use tax, typically equal to the existing sales tax rate. The problem is that the responsibility to file the proper forms and pay the use tax falls on the purchaser. For obvious reasons this just doesn’t work. So states are looking at a number of ways to get around the 1992 Supreme Court ruling of Quill vs North Dakota which ruled that a business must have a physical presence in the state for that state to require it to collect sales taxes. They are doing this by trying to redefine what constitues a legal nexus, i.e. a physical presence in the state, by threatening large internet retailers with negative publicity and costly legal action, and by lobbying Congress to enact new federal laws such as the Main Street Fairness Act.

    One thing that never comes up into the arguement is the cost BEYOND the tax itself. Think of it this way, if the state had to send an agent to your house to collect all the sales taxes you and your family owed (can you say use tax?), the cost of collection would be enormous. But put that burden on the retailer and it costs the state nothing! However, don’t be fooled, the cost is still there. The retailer must compute, collect, account for, file and remit the tax. That all takes time and resources. So what the state is doing is shifting their cost of tax collection to the retailer. But it doesn’t end there because the retailer ultimately passes that cost on to you, the consumer, in the cost of their products.

    Putting the burden on the retailer to comply with the sales tax laws of over 11,500 different taxing authorities is significant. Even in those states which have joined the Streamlined Sales and Use Tax Agreement questions and problems still remain. If smaller retailers, unable or unwilling to comply disappear, so does the competition they provide that keeps prices down for all of us. I say this as one who stands to profit from all of this having developed a computer application which computes and accounts for sales taxes for every one of those 11,500 tax authorities. (www.ipgmr.com).

    So, be careful what you ask for. You might just get the opportunity to pay YOUR portion of an estimated 23 billion dollars of additional sales taxes next year alone.

    Gary Hornibrook
    Hornibrook Company Computing
    2207 Roosevelt Road
    St. Cloud, Minnesota

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