Will The House Be Convinced That An Online Sales Tax Bill Hurts Small Businesses?

    May 11, 2013
    Zach Walton
    Comments are off for this post.

The Marketplace Fairness Act – a bill that forces online businesses to collect sales tax from all 50 states – is fairly controversial. Some fear that it will put an undue burden on small businesses. It’s a legitimate concern, but opponents may not have to worry as the bill is about to face its toughest hurdle yet – the House of Representatives.

Do you think the Marketplace Fairness Act will pass the House? Does it have a chance of being signed into law? Let us know in the comments.

On Monday evening, the Senate voted in favor of the Marketplace Fairness Act by quite a wide margin (69-27). The bill enjoyed bi-partisan support and the National Retail Federation applauded its passing with a statement saying that it expects the bill to pass in the House as well:

“This bill and its companion in the House will level the playing field for all retailers – both online and off – while safeguarding states’ rights. And the bill does it all without raising taxes, new government mandates or adding to the deficit. NRF and our broad cross-section of members will work closely with our bipartisan sponsors in the House, Reps. Womack and Speier, and Chairman Goodlatte to ensure that efairness is debated honestly and on its merits. When brought to a vote, we believe the House will pass the bill and it will be signed into law.”

Despite the NRF’s enthusiasm, the Marketplace Fairness Act will probably not get the same treatment in the House as it did in the Senate. For starters, the Senate completely bypassed the committee process thus ensuring that the bill was approved with its original text. Most would say that was a mistake, and the House fully intends to correct that mistake by putting its version of the bill through the House Judiciary Committee.

This is where things get tricky. The House Judiciary Committee chairman is Robert Goodlatte, a representative of Virginia and one of the few Republicans in the House that has voted in favor of tax increases. Despite his willingness to raises taxes, Goodlatte may be opposed to the Marketplace Fairness Act if it isn’t simplified enough. He said just as much in an email to The Roanoke Star:

“I do not believe legislation like the Marketplace Fairness Act is sufficiently simplified yet. While it attempts to make tax collection simpler, it still has a long way to go. There is still not uniformity on definitions and tax rates, so businesses would still be forced to wade through potentially hundreds of tax rates and a host of different tax codes and definitions. There is also concern that despite disclaimers the bill could open the door for states to tax or even regulate beyond their borders. I am open to considering legislation concerning this topic but these issues, along with others, would certainly have to be addressed.”

Goodlatte shares the concern that many others in and outside the House share about an online sales tax bill. Many think it may go too far. It also doesn’t do anything to help simplify tax collection for these online businesses as they would have to submit themselves to whatever inane sales tax code each state employs.

Still, Goodlatte may let the House’s online sales tax bill through his committee. It could be just a little or very different from the bill the Senate passed, but it would still face some stiff opposition before hittting the House floor for a vote.

That stiff opposition is the large number of organizations and businesses that have come out swinging against the bill. For starters, the Financial Services Roundtable has said that it will oppose the bill as long as the bill’s wording is vague enough to allow a tax on financial services transactions:

“A transaction tax on financial services products will hurt retail investors, retired Americans, and small businesses, effectively making it more expensive for them to invest and plan for the long-term. Without hearings, these implications and others will not be properly addressed.”

What is arguably the most influential outside voice in the House on tax issues – Americans for Tax Reform – has also come out swinging against the bill. The group says its main concern is making small online businesses collect sales tax for other states, but it says the bill has a number of other problems as well:

  • Threatens Privacy – Business and state revenue boards with a track record of losing private information will have more chances to do so.
  • Slippery Slope – Opens the door for further government intervention in the internet and for states to reach across their borders for other taxes.
  • Too Confusing – Small businesses would be forced to accommodate over 9,000 highly variable state and local tax codes and be required to settle disputes with out of state revenue boards in out of state courts.
  • Discourages Tax Competition – Rather than competing to lower taxes and attract businesses, states will compete to raise taxes on residents of other states
  • Expands State Tax Authority – State Governments will be able to tax across their borders despite clear legal and judicial precedentarguing otherwise
  • Do you agree with the arguments against the online sales tax bill? Or do you think it’s still a good idea? Let us know in the comments.

    If all of the above fails to move the House against the bill, there may be one final obstacle standing in its way – House Speaker John Boehner. He holds considerable power within the House, and he has already said that he opposed the bill. Speaking on Bloomberg Television, he said that the bill would make “it much more difficult for online retailers to be able to comply” with state sales tax regulations. He also said that the bill would put “a big burden on some very small businesses.”

    The Senate passed the Marketplace Fairness Act with little debate, but it’s looking like we’re going to get plenty of heated arguments in the House. The opposition is fired up, and there’s plenty of powerful congressmen opposed to the bill. It may not be enough to stop the bill in its tracks, but we’re at least going to get some interesting debate on the Internet and online taxation out of it.

    Will the Marketplace Fairness Act survive in its current form? Or will the House spruce it up to make it more palpable to online businesses? Let us know in the comments.

    • Darlene R.

      I do not agree with this bill. This is truly wrong. Anything to keep the little guy or gal from making it big . Please house , do not pass this bill.Bad on the consumer as well. Who wants the pay more taxes. I can see if a company is making more than ten million dollars and has over fifty employees. By the way , I am a democrat but this bill really stinks.

      • Joel

        While the overall intent makes some sense, our politicians again show their disconnect with the world. The proposed $1M is much too low. The cost of compliance at that level will shut those businesses down. They really think that “free” software will integrate with the software and systems the retailers use? It’s obvious they have never run a small business.
        Without taking the time to read through all the verbal diarhea of this bill, is the proposed $1M number gross billing, including shipping, or net purchased item value? Sometimes shipping costs are a significant % of the total bill.

      • Sten Wilson

        My business using modern technology is now enabled to easily calculate, collect and remit sales tax for any jurisdiction in any state. Heck, it is actually much easier to process sales tax than having to deal with the burdens and complexities necessary to ship goods to over 40,000 different zip codes. No longer do waste profits paying for accounts and bookkeepers to deal with remedial legacy sales tax processes.

        This Bill in no way creates a new tax. It simply grants States’ rights to choose collection of existing sales and use taxes already due. Already due in most states since 1932. Currently resident consumers are required to self track and remit sales/use tax on all their out of state purchases including those made on the Internet. the problem is many resident consumers fail to comply. This lack of honorable compliance forces sates to increase other taxes and fees to compensate.

        For instance the state of CT last year enacted the largest tax increase in it’s history. Beneficial clothing and real estate exemptions were eliminated, business taxes increased, and sales and income tax rates increased.

        Now, thanks to the growing amount of sales tax evasion, less fortunate families with little or no credit and Internet access are paying more at local registers. Also, families are experiencing higher rents and mortgages as the result of increases in property taxes. Many are loosing jobs as business choose to close as a result of increased business taxes.

        Modern technology easily enables any business to grow and adapt with changing tax policy. The real issue is whether we choose to be misinformed by those desiring to profit and limit competition, or do we make intelligent decisions and take advantage of freely available modern technology creating greater efficiency, profitability and market opportunities for our own businesses. Your choice.

    • http://www.frogdice.com Michael Hartman

      I am going to put this here before someone trots out the idiotic “but its not fair to mom-and-pops trying to compete who have to pay sales taxes.”

      Your argument utterly fails, 100%, as soon as you mention “competitive disadvantage.” The point of sales tax is not to create a level playing field.

      If that’s now a legitimate reason for a tax, then lets have a 99.99% tax on EA and Activision so I can compete with them in making video games. Absurd!

      USPS and UPS are already coming to your neighborhood and those roads are paid for by other taxes (property and gasoline taxes).

      The entire infrastructure to support strip malls and such are paid for by sales taxes. That’s a lot more than just roads.






      Electrical lines.

      Traffic lights.

      The list goes on.

      All of those prodigious costs are what those sales taxes pay for. The vast majority of those things exist for online sales.

      • Jaishree

        Your argument carrier no weight. Why should a resident in CA who is buying goods from an online retailer in GA pay for GA services that you listed. Remember, not the retailer paying taxes, they are just collecting. It’s the end customer paying.

        • Sten Wilson

          You are correct, the end users pays the sales tax which funds the services and infrastructure insuring the safe delivery of goods to their doorsteps. I am grateful to be enabled by modern technology to efficiently remit my customers’ honorable sales tax contributions back to their taxing jurisdictions. I am grateful because those contributions provide jurisdictions the ability to fund vital and necessary police, services and infrastructure. Police, services and infrastructure ensuring my out of state goods arrive on customers’ doorsteps efficiently, affordably and safely.

          For me, collecting and remitting sales tax already due translates to healthy vibrant communities representing stronger market opportunities for every businesses. I believe this simple and efficient process when understood will be unanimously accepted and embraced by every business owner seeking greater efficiency and profits.

          Modern technology freely available easily enables any business of any size to calculate, collect and remit sales tax for any jurisdiction in any state. After a 20 minute process my company is now enabled to efficiently and seamlessly calculate, collect and remit sales tax for any jurisdiction in any state. Heck, it’s now easier to process sales tax for thousands of jurisdictions than deal with the complexities and burdens required to ship goods to over 40,000 different zip codes.

      • http://cass-hacks.com Craig

        If I buy something online from California and my house in Wisconsin is on fire, do I then call the fire department in California?

        I might as well call the California police in an emergency but I think a Wisconsin based police department might just get here a bit before them.

        If I need an ambulance, I don’t think waiting for one from California would be prudent.

        I don’t think the water I get out of my tap in the kitchen comes from California either.

        My electricity may, under some conditions, come from outside Wisconsin but California isn’t anywhere close to the grids my power is drawn from.

        I never see California traffic lights, except on TV but I don’t think I should have to pay just to see video representations of them.

        The list stops there as none of your arguments for an interstate sales tax on electronically ordered goods are valid considering there isn’t and never has been an interstate sales tax on snail-mail-ordered goods.

        • Sten Wilson

          No, you call the fire department in Wisconsin since that is where your tax is remitted to. The California merchant would remit your tax payment back to Wisconsin. Your honorable tax payment directly pays for the services and programs you support on your local ballot initiatives.

          • Cj

            All I know is if I am on vacation and go into a store they don’t ask where I live to figure my sales tax they charge the tax in their location. If you buy from me online the sale takes place at my location where the merchandise is located. Another thing that no one is taking into account is that the only thing keeping the USPS alive right now is shipping from small online businesses not the big guys they use UPS and FedEx. How will this hit them?

    • Roman

      So if a online business gets audited by out of state agency, do you now have to fly from NY to California to appear in court. How does that work? This should be unconstitutional, “No Taxation w/o Representation” The only clear beneficiaries of this bill are state representatives and lawyers and accountants. The main group that is getting screwed is the consumer, which is effectively a tax increase.

      This is an assault on a consumer and small business.

      • Sten Wilson

        My small business using a Freely available Certified Service Provider (CSP) is easily and seamlessly enabled to calculate, collect and remit sales tax for any jurisdiction in any state. Should any state choose to audit my sales the CSP takes care of it. Any business utilizing freely available modern technology will receive indemnification against audit issues. The Bill specifically states the software must be free to merchants. One of the many benefits certified free technology offers businesses is indemnification against any audit issues.

        • Gary

          You are obviously merely using this serious issue to advertise this software. The cost of running a legitimate small business grows harder each year with operating cost going up. I know, I have been doing this for 30 years now.
          Want a simple way to collect taxes? Tax each sale based upon your location and every state wins.
          There are no legitimate small business owners that would want this tax issue, as it stands, allowed to pass.

      • Cj

        Another new tax on the middle class!! Surprise.

    • Jim Sleter

      I do believe that most of the taxes raised, by the Fed, are unconstitutional as the Fed is given the power to tax to PROTECT the citizens of the United States.
      Personally, I think that most of us are over burdened by taxes as it is. I understand the need to raise taxes to pay for essential services but there is never a way to monitor the money to make sure it goes to where it should.
      Therefore, Just Say No to Internet Taxation.
      So there….

      • Sten Wilson

        Just to clarify the Marketplace Fairness Act does not create a tax on the Internet nor does it provide tax revenue for the Federal government. The Marketplace Fairness Act simply grants States’ rights to choose collection of existing sales/use tax already due in many states since as early as 1932. Internet consumers are currently required to honorably self-track and remit sales/use tax on their Internet purchases. Unfortunately, many Internet consumers are unaware of or choose to evade sales/use tax already due. This Bill does not change in any way your rights as citizens of the state you and majority of your constituents reside in to petition your legislature for 0% sales tax if so desired.

    • Anon

      Politicians are on the pockets of the largest corporations on the planet, so no, they won’t give a rats ass that small businesses will have to close and hand all their customers to Amazon – the politicians will get a nice little board position when they’re done fleecing the public in their political office, or some other perk for doing the dirty on their elected in favor of their own greed and the needs of their corporate sponsors.

      I’m surprised anyone is even doubting the thoroughness of the corruption of the corporately owned political class.

      This will pass, thousands of small businesses will have to put up their prices, Amazon and others will weasel their way out of paying (through some BS charity loophole) and keep prices low, small businesses will collapse all across America as more of the idiot masses pay more of their money to the cheapest monster on the internet without considering the corruption and monopolization of America that they are contributing to…

    • http://dark_ages_games.com Anita Headley

      I am against any bill that requires me to try to keep up with hundreds of different tax rates. I have enough trouble keeping up with the different local and county rates in my state. As proposed, the bill would shut down the internet portion of my small business. It might put me out of business altogether.
      I would not oppose the bill IF
      1) It was a set rate across the board for all internet sales.
      2) It applied to all internet sales by both large and small businesses.
      3) It was kept to a reasonably low rate.

      • Sten Wilson

        The great part of this legislation is small merchants receive complete sales tax automation and indemnification against audit issues. Modern technology freely available easily and seamlessly enables any business to calculate, collect and remit sales tax for any jurisdiction in any state. All the rates and filings are part of the package as well. Business are not required to keep up with or track the rates. Since the rates are provided by the states and applied by the Certified Service Providers, merchants receive indemnification against audit issues.

        Sales tax rates are no longer an issue.

        All businesses of any size benefit and can easily comply

        The technology is FREE

    • VytasB

      I hate to say it, because it’s been saving me money, but the lack of comprehensive sales taxes on the internet is wiping out all the brick-and-mortar stores that can’t compete with no-tax internet sales. So in the name of fairness, there has to be a federal tax to even the playing field. I haven’t quit Amazon since they were forced to charge tax in California. Fair is fair. I’m sick of the tax crybabies. We’re the richest country on the planet, after all.

      • Jason Dupont

        The sales tax is not is what putting B&M stores out of business. It is their whole business model that is doing it. When you have increased overhead due to a physical store, more inventory, and more labor costs you have to charge more for your products. If you and B&M stores think this will save them you/they are sadly mistaken.

      • RebN

        VytasB – You have to ignore a lot of the details in order to think this is about fairness… I used to have a brick & mortar store. About 5 years ago I shut down the store and went online for one reason only – because it is a much larger customer base… My overhead is the same (I still pay rent for a warehouse, and have the same number of employees), but my work load is now much greater! In my brick & mortar store we received a new shipment, slapped a price sticker on it and immediately put it on the shelf. A customer would walk in a buy it – done! Now – when we receive a new product we have to photograph it, write a compelling description, and then fill out an enormous data file that must be uploaded to our website just to get that product in front of the customer… Then, when the customer places their order we have to carefully pack it and process a shipping label… On top of that the customer has to pay a shipping fee that they would not have to pay in a walk-in store (which averages the customer 13% of their order value – higher than sales tax!), and then they wait several days to receive the product rather than walking out the door with it that instant. How exactly are we better off than a Brick & Mortar?

      • Rob

        Brick & Mortar businesses don’t go out of business because the internet doesn’t charge sales taxes. They go out of business because they are not competitively priced sales tax or not.

        For the states to collect tax on internet sales makes about as much sense as e-mail being taxed to subsidize the losing post office.

        • Mike


          Couldn’t put it better myself!

        • Sten Wilson

          A sale is a sale. Sales/use tax has been the honorable obligation of the consumer in most states since 1932. This is in no way a new tax. Bipartisan legislation to simplify existing tax schemes benefiting all businesses, local governments and consumers is excellent, much needed and long overdue. Whether tennis balls are bought online or locally they are taxable in the jurisdiction of use no matter their origin or place of production. All retailers whether online, brick and mortar, or catalogue should be grateful to their consumers doing everything possible ensuring the highest quality product, fairest price, highest level of customer service including the simple collection and remittance of sales tax due. Removing the pesky task of use tax tracking and remittance from individual returns, and returning sales and use tax proceeds back to their consumers’ jurisdictions funding education, local medicare, infrastructure and so much more should be a top priority of all businesses.

        • Ron

          Amen. You make a great point. I’m so tired of the government bailing out businesses that, for whatever reason, are unable to keep up with their competition.

          The American auto industry still produces cars that are inferior to their competitors overseas. How many times will the Feds bail them out? Remember Chrysler? If they can’t compete, so be it… change your business model or close up shop.

          We used to have a free market system in this country which gave the advantage to the innovators. All these government interventions are destroying this concept. The businesses that succeed are those that cry the loudest to the Feds.

      • http://www.TheMoldStore.com John Panagos

        So why can’t these poor “brick and mortar” businesses put up a website and compete with those of us that don’t quit work at five o’clock and go home to their families. I’m processing and filling orders into the wee hours (thank God) most nights when the store on Main Street is closed. Many of our orders are shipped out of the country— helping our country in a small way by “exporting”. Yes, we manufacture our own products here in the USA—We don’t retail merchandise made in China. Our USPS shipping expenditures to foreign countries are well over $10,000 a year— so we are supporting the USPS as well. BTW… I believe that Amazon is all for the Bill. What does that tell you?

        • http://www.onlinemarketexperts.com/ Phil Leahy

          It’s a know fact that Amazon support the bill because it will hurt small retailers and this is the reason why eBay is against the bill.

      • Mike

        For heavens sake brick and mortar stores always have an unfair advantage by offering immediate gratification, on the spot transactions regardless of weather, time zones or after standard shipping hours. Online merchants are at the mercy of storms, damaged or lost shipping parcels etc. If the Brick and mortar guys can’t get their act together and make their case to their customers they should go out of business! Its a free market here and use your situation to your advantage!

        Online stores can never be cheaper than brick and mortar if you include shipping costs in your final tally. Yet I have never heard discussions to add a tax on Brick and Mortar stores to “level the playing field”.

      • Cj

        It is not the sales tax that is hurting the B&M merchants by the time you add shipping and handling charges they are about the same it is the high cost of renting good retail locations along with all of the state and local requirements put on stores that online business don’t have to deal with. I can keep a lot more inventory in my garage than they can display in location. Sales tax is just what they want to blame their decline on.

    • Bid

      As a small, bricks and mortar business competing against behemoth competitors that don’t pay sales tax now, I want this to pass. This will somewhat level the playing field. As it’s written, small businesses with less than $1,000,00 in sales are exempt.

      This is a small step to help keep small businesses in business.

      • RebN

        FYI, the big online businesses already pay sales tax in most states – which is why so many of them support this bill – they know it will squash their online small business competition. This bill is primarily AIMED at small businesses, otherwise why would the revenue limit be so small? $1 million in revenue is a super small business, especially if you have employees, rent and physical inventory. We have 5 employees and are already past the $1 million mark… and I can assure you, after all the rent, salary, inventory costs, taxes, and everything else we pay, my husband and I take home a modest salary and are thrilled if we have anything left to save for the future growth of our business!

        • Sten Wilson

          Are you remote sales, not gross sales, in excess of $1MM. The provides a small seller exception for sellers with up to $1MM in remote sales. Besides, in my opinion there in no need for a small seller exception at all. Freely available technologies make tax processing so efficient for any size business. I eliminated having to pay my accountant, lawyer and bookkeeper for any sales tax related issues. Since the FREE Certified Service Provider maintains liability for audit issues i no longer worry. What once took hours upon hours processing sales tax for just three sates is much much simpler and transparent for thousands of jurisdictions in dozens of states.

          Freely available modern technology offering you sales tax tax automation and indemnification against audit issues would be a good thing. My small business, much smaller than your, utilizes freely available modern technology enabling sales tax calculations, collections and remittances for any jurisdiction in any state. Heck, it’s now much much simpler to process sales taxes for thousands of jurisdictions than having to deal with the complexities and burdens involved in shipping goods to over 40,000 different zip codes.

          Unrealized by most businesses, is that this legislation actually benefits all small businesses. The only obstacle is the tremendous amount of misinformation recycled by eBay.

    • John

      The giant online sites can afford this and they have taken over organic search on Google for most all products. If sites under $1,000,000.00 gross sales are exempt it could actually help small niche sites.

      • http://cass-hacks.com Craig

        Taking over organic search is easy to do if one knows what one is doing, not in the area of SEO but more so, simply knowing how to give customers what they need to make decisions.

        Trying to play “SEO Ex-pert” has a greater chance of losing one traffic. Simply remember that the more information one makes more easily and directly available, the better rankings and more traffic one will get.

        It’s not rocket science. Simply follow the Google Webmaster Guidelines and you can’t go wrong.

    • http://www.sfpincchicago.com Shadow Fire Promotions, Inc.


      If sales tax is the ONLY thing standing in between the success or failure of a local, brick and mortar business and ANY other business, online or no, then that company should likely not be in business, and will fail sooner rather than later, regardless of anything else.

      It’s been stated before, tax, of ANY sort, is not, can not, was not, and will not be at any point in the future, be the SOLE factor in the success or failure of a business, online or no. Tax of any sort also should not be something to somehow “level” a “playing field”. If that’s the case, then we would have a national and state flat tax, as opposed to a tax based on your level of income. It’s not a level playing field if a billionaire pays more in tax than the McDonald’s worker.

      We’d explain in great detail to you how the argument isn’t against tax as a whole, but how the argument is against filling out as few as 49, and possibly many more tax returns as punishment for daring to be more than a small, local store that doesn’t sell online at all.

      By the way, this tax would also have to level the playing field for any local store that sells anything online outside of their state line.

      Of course, no one thinks about that. All that people think of is how much more money they will get once this new tax is passed.

      Fortunately, we took the time to add up how much more revenue would be generated by this new tax.

      $0. That’s right. Zero. Nothing.

      Why? Because no business in their right mind would ever consider basically surrendering themselves to a tax that has no definition, and is subject to the whims of each territory/state. Oh, websites will still exist, just that one of two things will happen. Either all merchandise must be shipped locally and subject to that local tax, or stores will simply refuse out of state sales.

      To recap, politicians won’t make any more money, and anyone who strictly sells online will reduce their sales to in-state only.

      This will be a major success and a true feather in the cap of the politicians who are sponsored by large corporations looking to cut costs, as more business will shift overseas, making China more competitive, and the U.S. less competitive.

      I am certain this bill will be law in short order, and eagerly await the results when politicians realise that they won’t make any more money, which will prove rough for them, as they will have already spent the anticipated trillions of dollars in revenue from this new law.

      • http://cass-hacks.com Craig

        It’s not the sales tax itself, customers pay that.

        It is the backend processing needed that is the killer.

        Try to imagine having to process ~9,000 different tax rates based on state, county, sub-county and city and in many cases a combination of all four from keeping track of what they are, as they do change, EXACTLY where one is actually from and keeping track of where each was from and where each of the taxes should go.

        A brick and mortar store has but ONE combination of taxes paid to no more than 4 entities. Try expanding that to ~45,000 possible taxing combinations paid to ~9,000 different entities.

        Also, try to determine a reliable and fool-proof way to determine where exactly someone is.

        Let me know when you’ve got all that figured out.

    • http://www.flirtylingerie.com Lisa

      As an owner of an online store I am concerned about the potential for this bill to begin the slide into chaos. First I don’t know if the $1,000.000.00 dollar exemption. If this remains in the bill I am wondering what happens at 1 million and one dollars and above. Do you have to pay on the one dollar over the threshold? More importantly what do I do if 1, 2 or more states have a problem with my return/s or decide to do an audit? I have read that software will be made available, where do I get it, but paid by whom? Also, how much time do I have to expend learning how to operate the software, how much time to complete the software and submit the returns as well as all the other record keeping? Before you start on this is evening the playing field, you are not correct. Presently brick and mortar stores only pay local taxes in the states that they collect those taxes and have a physical location. Further does this open the door to have foreign countries to have me collect their taxes? As my site is world wide, do I, don’t I have exposure? For these and a couple of other reasons I am concerned. Truly as I am online I don’t know what resources I am using in 49 other states. We will see what the House of Representatives has to say on it but I for one hope it is voted down.

      • http://cass-hacks.com Craig

        You forgot to figure in the ~$100,000 it will likely cost in developmental, testing costs that it will take to integrate any ‘free’ software into your current backend.

        And then, add in about $20,000 to $30,000 for maintenance over the course of each and every year.

        I work for a small combined brick-n-mortar / E-tailer company as a web application developer so I know what it would cost to implement something like this, assuming the software to handle the tax and remittance portion is free.

    • Ritchie Mayes

      We’ve had this conversation and debate during a discussion on ratification of the Constitution in my English literature class, while I was an undergrad. The point is: federal government by nature of its distance from local concerns, can only act with indifference. Enforcement would be a nightmare, in addition to the Constitutionality of states rights to legislate commerce. The internet sales tax is only a ploy to strip states of is rights to determine its tax base, in addition to an affront on sovereignty. If the feds want state sales tax to be regulated. Each state should apply its own rate on the front end before shipment of anything sold on the net.

    • Joons

      We are based in Canada but do 95% of our business in the US shipping from US warehouses.
      As Canadians we are used to paying sales taxes for ALL sales in Canada but it is a relatively simple thing to do – 10 provinces and a couple of territories. Tax paid at the federal & provincial level that’s it and it’s collected by the feds. 1 tax form to fill out every quarter and then a more vigorous check at year end because ours is a Value Added tax so we get to put sales taxes we pay for on business expenses against the retail tax we collect and submit the difference.
      I doubt if this tax will be as simple.

      As I mentioned we are used to sales tax and we don’t have an issue paying if it’s fair and within our ability to administer it. I fear we will be spending all our time as tax collectors filling in potentially 9,000 forms and then be open to audit by 9,000 entities.
      That’s the nightmare.
      Hopefully at worst – 1 federal level, 1 return that includes a list of tax collected for each state and let the fed divvy it up.
      Think I’m dreaming in technicolor though!!!

      • http://cass-hacks.com Craig

        “let the fed divvy it up”

        You are from Canada and so can be excused for not knowing the folly of letting the US federal government divvy up ANYTHING.

        Who is REALLY going to benefit is the US federal government because they will be able to add more staffing and budgets growing ever larger and will receive more benefit than any state, county or city will that would be the final recipient of any lower entity receiving pennies on the sales-tax dollar with the federal government sucking up most of it, one way or another.

        • Sten Wilson

          This legislation does not create a new tax nor does it create a Federal agency ion any way. Fact, sates are now recognizing that sales tax automation freely available to merchants eliminates administrative and bureaucratic burdens. Sales tax automation enables states to eliminate legacy bureaucracies insuring a greater percentage of every sales tax dollar honorably remitted funds intended programs and services. Sales tax automation also enables businesses of any size to eliminate manual legacy tax procedures freeing up valuable time and monies to grow their businesses.

    • http://teamwiztech.com Delia

      The million and over saves my clients as most of my e-commerce customers fall underneath that line. Whew.

      And there are a number of already certified providers that site owners will have to turn to in order to collect and send tax correctly. Avalara is one of those companies and is working hard at setting up as many existing carts to use this method. I helped with the Zen Cart version. It’s a paid subscription service but takes the problems of this kind of tax collection out of the equation for most.

      What I object to is to that standard line that online retailers have an advantage because of not having to charge tax. For most items that’s plain bunk.

      When I buy something on the internet, I’m usually paying less (sometimes even with shipping) than I may be paying here locally.(Whose fault is that?) If it’s available locally and for close to the same price, I would rather buy it today than wait for it to be shipped.

      I was hunting for a specific dental guard that is supposed to be available at Walmart and Target. Not in the stores, nope. Target on line yes. Did I buy it? Absolutely not. Because Target wouldn’t tell me what the shipping charges were unless I signed up for an account. That has nothing to do with taxes.

      You cannot simplify online ecommerce and say that not paying tax gives online retailers an advantage. Maybe when buying high ticket items – furs, cars? sure but for normal everyday purchase. No way. It’s just a lot more complicated from that.

      That’s the word from an e-commerce developer with 13 years experience.

      • http://cass-hacks.com Craig

        It’s not a matter of individual sales being under or over $1,000,000.00, its gross sales.

        That said, I don’t know if you meant as clients and your being a developer that your customers are e-tailers with gross yearly sales under $1,000,000 but even if *most* are not, any who are will need the additional backend integration so you’ll have to deal with it one way or another.

        I would bet though that you’ll apprise clients of their possible need for the additional application integration and they’ll claim they don’t need it, until they find out they do so whatever you develop, make sure it can be easily plugged in to whatever you produce, which you’d likely do anyway.

        On the other hand, additional development just adds to the price you can charge but my experience is that too many potential clients think they can get an e-tail application and go live for a pittance and once they know what it would really cost, they start looking for some 13 year old “Web Developer” who says he or she can do it for $2,000 so, adding to the cost even more is likely to decrease your potential client pool even further.

        Been there, done that, quit being a freelance developer because of it.

      • http://www.gbepackaging.com Bob Teal

        Just so you know if someone is telling you a shipping cost without your address then they are overcharging you as even we need an address to provide a shipping amount unless we charged everyone more than it really costs to ship. We had that choice to over charge with a merchant defined shipping table or offer real time shipping from our carriers and we picked real time shipping as it is better for the customer but we make less on shipping as we are not overcharging you. If you want to save money on product packaging then come to GBE Packaging.

    • Leo

      Lots of people forget that online businesses have to pay high shipping cost to UPS, FedEx or USPS. Sometimes those shipping costs are as high as 50% of their sale prices. Local retail stores don’t have that cost. If we are talking about a level playfield, it is not level now. Adding another tax would hurt the online businesses further more. Congress, please stop this bill.

      • http://cass-hacks.com Craig

        Interestingly enough, mail-order retailers also have shipping costs.

        What they don’t have though and nothing has been mentioned about it, having to pay sales tax in any of the ~9,000 different tax zones than their own.

        Fairness? Are the now going to tax the delivery of emails to be more fair to the US Postal Service?

        Come to think of it, the junk mail we get in our physical mail boxes subsidizes, to a greater or lesser degree the delivery of the real snail-mail we want and we already get inundated with spam emails so maybe they figure a balance has already been achieved. 😉

      • http://www.gbepackaging.com Bob Teal

        sometimes shipping is more than the product in our case as our prices are so low on packaging supplies. We lose 80% of our orders due to shipping costs. Some products are just too expensive to buy on line due to shipping costs. Now lets add taxes too for everyone. Lets see 10% of nothing is what? How can putting small business out of business good for the economy. Come to our website if you want to save money and stock up now I suggest.

    • John

      No taxation without representation!

      Big box stores like Walmart and Best Buy lobbied for this bill in order to sink smaller competitors (mom and pops), knowing they can’t absorb the change, should it come to pass.
      This has nothing to do with competition. It has everything to do with complete market dominance by a small, powerful few.
      Corporate lobbying in DC is what needs to end.

    • Dewbert

      Sounds like the easiest thing to do would have a flat Federal Internet Sales Tax rate that is sort of an average of all the States’ sales tax rates. The Federal Government, who loves to collect taxes, can dole out the appropriate amount of taxes to each State once per year. I am sure they would want a percentage, for their services.

      • http://cass-hacks.com Craig

        Why only a flat Internet sales tax? Wouldn’t it be more fair to have a flat US sales tax, period?

        I’m not advocating for that and instead point out that the measures they propose or have talked about only make their ‘fairness’ more of a sham.

    • http://www.lighting2lightbulbs.com Mike T.

      Online businesses has never been a threat to B&M companies, purely because an online retail store might have competitive prices but generally they are forced to ship everything, costing them on average $9.95 shipping per package, so their profit margins are a lot lower. If you had to compare shipping to that of taxes, then they are nothing. So to say that tax is going to even the playing field for B&M is incorrect. It will give B&M a huge advantage if now online stores have to pay for shipping and taxes too. I personally think $10 million should be the threshold to impose tax. Plus in today’s market place if you are B&M and have no online presence you business model is flawed, and you might need to reconsider!!

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      for spn lover

    • http://www.ornametals1.com Thomas ELfers

      Although I do not have a problem with the Sales Tax issue, I do have a major problem with the Filing and payment of said taxes to 50 states. Talk about an accounting nightmare! Does anyone know if the collected sales tax will go directly to the intended state sales tax office at the time of sale, or do we the sellers have to file as we do in our individual state of business, times 50? You are talking about increasing your sales tax bookkeeping by 5000%, if you do business in all 50 states! Small or large company, in what way are we the “Tax Collectors” (sellers), “Inter-company Tax Auditors”(sellers), and “Tax Accounting/Bookkeepers”(sellers again), being reimbursed for all of the extra bookkeeping, accounting, and lets not forget the Time!
      To tell any business that their tax accounting, tax labor, tax postage and tax filing is going up 50 fold is simply ludicrous. That being said, if the new bill includes a way to submit the sales tax to the state of sale, at the time of the sale, (meaning the purchaser is responsible for submitting the tax, not the seller), then I would like to see how that is going to work before I would be for or against the change.

      • http://cass-hacks.com Craig

        50 states, not to mention all of the different taxes in each state that may vary based on city, county, sub-county or a combination of all four, city, county, cub-county and state. ~9,000 different tax zones with an estimated ~45,000 different possible combinations.

    • http://www.TheMoldStore.com John Panagos

      Why don’t these “small local businesses” put up websites if they want to compete on the Internet? This Bill is not about leveling the playing field for local businesses anyway… it’s about collecting more state sales taxes!!! Many small Internet businesses will be forced to close due to additional pressures of collecting these taxes. I started my business over 21 years ago, and I’d like to know what time is left each day for doing the 50 state tax paperwork after working 18 hours a day trying to keep just “SOME” of the money I earn in my business. I’m disgusted with our government representatives— all they represent is themselves and THEIR pocketbooks! As usual— Small business is being strangled!

      • http://cass-hacks.com Craig

        Collecting them is ‘easy’. The killer is figuring out what they need to be for a given sale in the first place, and in the second place remitting each ~9,000 different taxation entity their proper due.

        • Sten Wilson

          Freely available modern technology easily enables any business of any size to calculate, collect and remit sales tax to any jurisdiction in any state. Heck, it’s now much much simpler for my small business to process sales tax for thousands of jurisdictions than it is to deal with the burdens of processing shipping to over 40,000 different zip codes. The integration took 20 minutes and my business is now more efficient and profitable processing sales tax for dozens of states compared to previously dealing with three states requirements. As an added bonus, my business is indemnification against audit issues because it uses a Certified Service Provider (CSP). Sates contact the CSP not me with any audit questions. The same modern technologies offering us all an ever expanding and growing marketplace now provide free automated tax processing for any business of any size.

      • randy

        Running a small business is not easy, regulation is a major part of running a business. I dont like or agree with a lot of it. But after 40 years of of owning a small business, I will say that on top of normal frustation and changes that acompany owing a small business the fact that a customer can order on line and save 10% sales tax from what I can sell them the product. the current unfair practice is forceing more companys out of business than an internet business that has to purchase software in order to track sales tax collections. Compitition is good but must be fair. We may not agree with our tax structure but I dont believe anyone can say that the current system benifits anyone but the seller. Whats the largest message on most internet sites (NO SALES TAX) it used to be that companies were built on customer service and support of local communities etc. not gimmicks and taxes.

    • http://www.atlasbiomechanics.com teri green

      Great read, thanks. If the big boys have to pay, then us little fish should also, IMHO.
      Thanks again
      Atlas Biomechanics

      • Bob Teal

        Walmart makes $95,000.00 per second. Dont think you can ever even that field IMHO

      • http://cass-hacks.com Craig

        The big boys have to pay for what?

        Is your shipping free? Would you have to pay sales tax for one sales tax rate to only 1 or up to 4 different entities or, would you have to track and apply ~9,000 different tax rates with up to ~45,000 different possible tax combinations and then pay each of those ~9,000 different entities their due, and then pray to the powers that be that none of the ~9,000 different entities decide to audit you.

        Add to that, the cost for shipping to the US from other countries is not that much more than shipping within the US. Are you really interested in giving your foreign competitors an advantage of 1% to 10% in price right off the bat?

        I don’t think you’ve really thought this through.

    • Bob Teal

      This is the worst idea I have ever heard. Customers also want to know what they are paying and I think about what it would be like to program in taxes for 49 states or over 9000 counties. Some tax shipping and some dont. Some tax handling and some dont. It would change too each year. Supply what ever software you want for payment but what about collecting it first. Customers will leave our site over a penny in price so what customers do we tax if we lose them all. I just cant think of a way to charge all of our customers tax even if our life depended on it. Do we have to go to California or New York if we are audited. Do we take all of our financial info with us across state lines and hope it does not get lost. I too would be ok with a flat tax for everyone but who can fill out 9000 tax forms quarterly.

      • Sten Wilson

        Modern technology freely available on the Internet addresses and eliminates all of your concerns.

        • Bob Teal

          You need to please E-mail me with the name of this software you speak of. I have been waiting for 20 years for free software that does anything usefull. Why are we looking for coders all the time that charge un godly fee’s to do php coding on our shopping carts. About 230.00 an hour. Software like that would out those coders out of business. lol. There is no free soft ware they would provide software to pay the taxes but collecting it would be up to us and everyone with a custom website would have to hire coders and pay for hundreds of hours of work at $230.00 an hour. Then it would change all the time after all 9000 counties with some taxing shipping and some not. Please post the names of this software as we all could use it.

    • Phil

      This should not be about big business vs. small business. It’s not about leveling the playing field for B&M stores. As it stands currently, the customers go into the B&M stores, shop, gather information, waste sales persons time, consume overhead, and go home and buy on-line to avoid the tax. The municipalities which are deprived of the “sales” or “use” tax are the big losers. They are deprived of billions of dollars every week in tax revenue that should rightly go toward infrastructure expenses. Without that tax the revenue is quite simply going to have to come from somewhere else. In all likelihood, another tax! As the number of retailers declines the loss of revenue only gets worse. If folks can afford to purchase goods, they can afford to pay the tax to help cities stay in business. Our Federal Government can print more money. Our cities and states cannot. This is not about raising taxes at all! There simply is no justification for one transaction being taxable, and another not. Either tax all sales transactions, or none at all. It’s not rocket science, thought some in Washington would like us to think so.

      • http://www.sfpincchicago.com Shadow Fire Promotions, Inc


        Your notion of “As it stands currently, the customers go into the B&M stores, shop, gather information, waste sales persons time, consume overhead, and go home and buy on-line to avoid the tax.” is absurd. Most people subscribe to the notion of “I want it NOW”, and wouldn’t go into a store and do all you claim just to skip out on sales tax. Most people would get the item now, as opposed to paying extra to ship it, and then wait. That’s possibly the dumbest notion we’ve heard so far.

        Perhaps, just perhaps, Phil, you find yourself not able to compete because someone else has a product you do not carry? Or perhaps your sales people give off an attitude of indifference?

        Additionally, Phil, you have NO figures whatsoever to back up the ludicrous claim of “The municipalities which are deprived of the “sales” or “use” tax…[and] are deprived of billions of dollars every week in tax revenue.”

        Back up these nonsense and likely bogus claims with actual, provable proof. You spout nonsense.

        Whatever the case, your notion is nonsense.

      • http://cass-hacks.com Craig

        I shop online mainly because I get better service, even consider shipping time-lag, than I get from far too many brick and mortar stores.

        B&M retailing and E-tailing both have their advantages and disadvantages and it is up to each to promote and improve their respective advantages and reduce and marginalize their disadvantages, think JC-Penny.

        Why should the government step in to the private sector and claim “level the playing” field when all they are doing is what they do best, a money grab from any and all potential sources regardless of the validity of their claim for doing so?

    • Chris Smith

      we are located in oregon. Oregon does not sales tax. If we are required to collect taxes for other states, we might not be able to maintain our business. E-commerce has created jobs for Orgenions.

    • dave ascher

      This is one of the most ignorant collections of comments I have ever seen . Most of the people who commented here do not understand that the business does not PAY the sales tax; the CONSUMER pays the sales tax to the CONSUMER’S state. The business is required to COLLECT the sales tax and send the money to the CONSUMER’s state.

      Now, CONSUMERS are supposed to pay sales tax to their own state if they purchase things from out of state – whether they do it online or via catalogue order of phone or in person. Virtually nobody does this on any purchase (other than vehicles and boats which cost big bucks and have to be registered in the CONSUMER’s state.)

      The reasoning behind this is not at all clear to me. One could argue that in the case of a totally in state transaction, the state has provided the buyer with roads, police, fire protection, etc. that help make the transaction possible. I’m not sure I get how a purchase from a retailer in another state is enabled by most services in the CONSUMER’s state.

      And, of course, sales taxes are a regressive form of taxation. If states need to find more revenue, then they should find fairer ways to get it.

      The bill seems to be discriminatory in that it requires ONLY online sellers to collect sales tax for the CONSUMER’s state.

      All the arguments about competitiveness are irrelevant. If I need an item urgently, I am not going to wait for it to be shipped in a few days. If I need a “special” item (for a gift, for example), I will go to a local retailer who probably carries it and examine it and purchase it. If I need a difficult to find item, I will probably look for it online since local retailers probably won’t have it. Local businesses that don’t understand why people do or do not shop with them are going to die with or without this bill.

      • http://cass-hacks.com Craig

        “business does not PAY the sales tax”

        Your’s is an ignorance of the e-tail business altogether.

        The government says that *the* software will/maybe be free but integrating even *free* software into an existing backend can cost up to $100,000 or more in development, testing and troubleshooting time not to mention the cost of maintenance and updating.

        The sales tax itself will be miniscule in comparison to the cost of implementing such a system and, miniscule in comparison to shipping costs.

        It is NOT the tax itself, it IS the cost of fielding such a system.

        Please know what you are talking about before making claims of others’ ingorance.

        • Sten Wilson

          My business with sales far below the proposed small seller exception currently benefit from freely available modern technology that easily automates sales tax calculations, collections and remittances for thousands of jurisdictions in dozens of states. No longer are my wife and high compelled to pay hundreds and hour to our accountant to deal with the remedial task of tax processing. It is now done free and efficiently providing increased profits and time necessary to grow my business. Heck, processing sales tax is now much much simpler than dealing with the tremendous burdens required to ship goods to over 40,000 different zip codes. Oh yea, it took me only twenty minutes to integrate the process into my checkout platform.

          • http://www.gbepackaging.com Bob Teal

            Who is this guy Sten. There is no free software and if there was it would cost tens of thousands of dollars to put into a shopping cart and then we would all just pay more for everything. Up to 10% or more for some counties. If this software existed we would be using it daaaaa. It would all be passed on to the consumer and the tax accounting deduction so it is just a way to take more money from more people. We do not need more taxes as they are buying everything they want now. We could never let our government buy whatever they wanted before or we would have run out of money sooner. This is a case of young people not fighting for their rights until it is too late. Thats why my kids are making less than I did 30 years ago. Speaks for itself I think. If you want to save money on packaging supplies go to our website. Our prices speak for themselves but we too are seeing record price increases this year due to fuel costs. In five years it will costs five times as much to ship your product out to your customer. Thats without the tax increase. Now start to worry. Really

    • Jim

      Internet sales tax is about as crazy as the rain tax in Maryland. http://www.washingtontimes.com/news/2013/apr/23/chesapeake-bay-foundation-maryland-rain-tax-time-o/

    • JC

      As a small business with one person operating all departments, we would not be able to continue the business if required to compute the tax for each city of each county of each state. One state has been a burden but dutifully served. As my customers include brick and mortar retailers, the end result would be loss of revenue, tax, and employment for this state and those with whom we interact.

      • Sten Wilson

        My wife and I own and operate a small online business benefitting greatly from technological innovation and scalability made possible by Cloud Computing. Until recently we were struggling with legacy tax procedures in our home state. The administrative burdens and expenses complying with States’ tax laws became onerous forcing me to search the Internet for a solution. What I found seems, to many, unbelievable.

        My company now employs free technology hosted on Amazon’s Ec2 cloud infrastructure enabling it to easily calculate, collect and remit sales tax for any jurisdiction in any state. TaxCloud seamlessly integrates with multiple payment platforms and shopping carts eliminating unnecessary administrative burdens. Now my tax processes are automated and efficient.

        3dcart CEO Gonzalo Gil states:

        “As another building block in our effort to ease the management process for online store owners, TaxCloud is the kind of efficiency application that is practical now and helps you plan for the future… this represents another way that automation is saving time and money for online retailers.”

        Technology now freely available to all businesses no matter big or small easily handles sales tax processing for any jurisdiction in any state. As Mr. Shay from the NRF points out it is now easier for businesses to process over 10,000 different tax jurisdictions than deal with the multiple complexities involved with shipping. Furthermore, the ICSC has discovered an average of 90% of Internet consumers desire to have sales tax collected by merchants at points of purchase instead of having to track and remit use tax individually. Governments also realize sales tax automation ensures more of every tax dollar funds intended programs.

        I strongly support and urge Congress to immediately the Marketplace Fairness Act granting states the choice to efficiently enforce their existing sales and use tax laws. Individuals, businesses and government will all benefit tremendously utilizing the efficiencies made possible by new technologies coupled with the power and scalability of Cloud Computing.

        • Verita Serum

          With all due respect, Sten… you have 4 products and do not sell over a million dollars. You are exempt from the tax…
          How much are you being paid by TaxCloud to peddle these lies and their for profit, rent-seeking software?

    • http://www.pricewars.wordpress.com price wars

      this type of tax will destroy any and all progress with ecommerce, a fair internet tax rate is needed. It’s a very simple tax, just take the lowest taxed rated state, make the tax a standard ecommerce bill of 4% under the ETF and Sherman act. then there is no confusion, ebay and amazon would charge a flat rate of 4% on online sales only, If I have my own website that bill would make that person have to have and internet sales tax id (ISTI) but only for online businesses, brick and Mortar or over the counter sales would remain the same. if that store sells online then under their sales tax id, if included that store only has charge 4% online sales tax. just my thought!!

    • Erik

      Pretty sure just the rumor of the new law is hurting online sales. Since this has been in the news sales have plummeted.

    • http://cass-hacks.com Craig

      How can it possibly be called a “Fairness” act?

      Do mail-order companies have to pay sales tax in the ~9,000 different sales tax areas, districts and regions? No.

      Why should the electronic version of snail mail-order have to?

      • http://cass-hacks.com Craig

        “Do mail-order companies have to pay sales tax in the ~9,000 different sales tax areas, districts and regions? No.”

        Typical government, compare apples to oranges to justify increasing taxes and the cost of implementing them.

        “Fairness”, my back-side.

      • Sten Wilson

        Since 1932 Sates began requiring sales/use tax all out of state transactions be self-tracked and remitted by consumers. This includes all out of state sales transactions including catalogue sales. Vermont is the 45th state to finally enact sales and use tax policies requiring residents remit sales/use tax on all out of state purchases in 1967.

    • http://www.exportechmiami.com Gabriel Martinez

      Be careful not to shoot your feet off lawmakers before you dimise an opportunity of billions of micro managed internet businesses in globalization just making ends meet, and as a direct result of aforementioned by dropping trillion of free flowing transactions that sustain US and World economics. Just for the few mere greedy with confusing thousand of tax code, would not benefit the many. Grave mistake to attempt to overtake global market when the world would just cut off the US because most goods are produced and fabricated abroad, not in US. No one in their right frame of mind around the World would adopt an imposed tax collection and burden for others, if dealt unilaterally by the US Govt.

    • Wayne

      It’s just an excuse to tax an already overtaxed nation.

    • Sten Wilson

      I have been following this issue and legislative progress for four years. First, thanks to the simplification measures established since 1992 tax processing is now incredibly simple and efficient. Modern technology freely available for all merchants give simplicity a whole new meaning.

      Shopping carts and checkout platforms now offer merchants pre-integrated sales tax processing. Merchants are no longer required to buy or install enterprise software solutions. For instance, merchants using X-Cart simply scroll through available options in the set up menu and select “TaxCloud.” Then they set up their TaxCloud Account, enter in required information, and in twenty minutes they are ready.

      I know this because in less than twenty minutes I set up a TaxCloud Account and automated my sales tax calculations, collections and remittances to thousands of jurisdictions in dozens of states. Only states which choose to simplify their rates and remittances processes, as established in the Bill, can gain collection authority requiring out of state merchants to comply. Even better, by using a Certified Service Providers businesses is indemnified against audit issues. The States and Certified Service Providers are liable themselves for any misapplied sales tax rates, and handle the necessary audits.

      In my opinion, what many fail to recognize is the large e-commerce merchants opposing this long overdue legislation, such as eBay, are spending millions on the “too burdensome for small businesses” campaign because the they know the opposite is true. Leveling the playing field and applying existing tax policy equally and fairly promotes innovations leading to greater efficiencies and competitiveness for all businesses and consumers. eBay won’t be able to manipulate their unpatriotic “tax free” pricing into higher fees and profits any longer.

      I applaud eBay for taking a stand and working hard to maintain shareholder value. Unfortunately for eBay their price per share has remained relatively flat over the past four years while Amazon’s value has increased over 100% in that same time period. I guess integrity still means something to investors.

      Based on the facts; freely available modern technology eliminates legacy administrative burdens for my business resulting and new found efficiencies and profits, tax processing for any jurisdiction in the country is now much much simpler than dealing with processing shipping to over 40,000 zip codes, states now realize that sales tax automation eliminates legacy bureaucracies insuring greater percentages of tax dollars honorably remitted fund constituents programs and services, and Amazon supports Federal legislation granting States’ rights to collect existing taxes already due within their borders, the Bipartisan Marketplace Fairness Act is excellant, necessary and long overdue piece of legislation.

      Missinformation is truly the only opponent to the Marketplace Fairness Act.

      My wife and I run our “mom and pop” small business ourselves choosing to utilize the amazing free technologies on the Internet to grow our business. For those nay sayers I expect your growth will remain flat along side eBay’s.

    • http://www.exportechmiami.com Gabriel Martinez

      The slow, slouching, lagging US economy at 4% with an inflation of 2% does not have the luxury and cannot afford to shut micro businesses and economies direct affluence that generates cash flows for investing and in turn create jobs here in USA. A growth relief injection to low and medium class Americans. Create jobs not cut them, rather than increasing deficits from welfare system.

      • Sten Wilson

        The economy is lagging because antiquated tax policies are choking less fortunate families. Less fortunate families without access to credit and the Internet that are forced to purchase their goods locally. Goods that are now being taxed by states at higher rates to compensate for the growing number residents choosing to evade their current tax obligations. Sales tax is currently required to be self tracked and remitted by Internet and catalogue consumers on all their out of state purchases. Even worse, many states have increases income, business and property taxes over the last decade to counteract the increasing amounts of evaded sales tax already due. Increased property taxes translate into higher rents, increased income taxes translate into less net income, and increases business taxes have forced businesses to close leaving many unemployed. Will equal application of existing sales tax policies fix it all? Certainly not. Will it begin to reverse this trend ? Absolutely! Tax policy when applied equally lowers individual tax burdens. Encouraging innovation business to automate sales tax processing creates greater efficiency and competition, and applying tax policy equally to all businesses is certainly correct.

    • alex

      I am a 1 man show. I have an online site. I sell & manufacturer 1.8 million per year.

      BEFORE: this bill,
      Between taxes & accounting

      I work 75 hours per week. (lets just say) I pay 15% income taxes.
      So that’s 11.25 hours per week that goes to income taxes
      ++ Accounting is 2 hours per day
      So add the 14 hours per week accounting + the 11.25 hours per week that goes to income tax.
      Thats 25.25 hours per week that ALREADY goes to taxes.

      NOW! You want me to WADE through 50 states worth of sales tax code? && do MORE accounting.

      Give me an EFFIN break.

      I dont mind collecting a “set” amount. Like say 6% and going to a federal fund, for them to disperse.
      But when you want me to disperse money to 50 states every month, thats insane.

      • Sten Wilson

        There is FREELY available technology that easily and seamlessly automates sales tax collections, calculations and remittances for any jurisdiction in any state. available to merchants of any size. When I was dealing with three states tax procedures manually the burden was a nightmare. But after integrating freely available modern technology enabling tax processing for any jurisdictions I am overjoyed! It’s now much much simpler to process sales tax for thousands of jurisdictions than it is to deal with the complexities and burdens involved in shipping goods to over 40,000 different zip codes.

    • Sten Wilson

      I’ve been reading a lot recently about proposed (or soon-to-be-proposed) federal legislation regarding online sales tax collection. But what I’ve read has mostly focused on Amazon and other large businesses, and I’d like to take a moment to focus on those who will benefit most by the proposed legislation: small business owners.

      I’m a small business owner myself. My wife and I own and operate a small sheep farm in upstate New York. We sell our wool products online, and also frequently visit festivals and fairs in other states to sell our livestock, wool, and yarn as well. With every sale, I am faced with the complex and exhausting task of figuring out how much sales tax I need to remit and filling out all the sales tax return forms.

      The Marketplace Fairness Act (MFA) provides an incentive for states to simplify their sales tax laws, so that tax categories and definitions are standardized from state to state and there’s just one simplified electronic sales tax return for all states. These simplification measures make a huge difference for me: no more trying to figure out if wool is in the same tax category in different states, no more filling out the wrong form, no more needless hours or money spent looking up all the different sales tax rates and figuring out which ones apply to which products.

      At this point you may be wondering how the MFA accomplishes all this. After all, the bill simply permits states to require out-of-state retailers (including online retailers) to collect sales tax. But the key is, only those states that have simplified and standardized their sales tax laws would be able to do so. In essence, the bill says that states can require out-of-state retailers to collect sales tax, but only if they make it easy for retailers like me to do so.

      A key part of making it easy for retailers to collect sales tax is technology. As one might expect, there are online services available to manage and even automate sales tax for retailers, from calculation to collection to filing. The MFA plays a key role in helping these services and states work together. It’s even requires a certification process for sales tax management services to ensure that every state desiring collection authority must test the services and verify they adhere to states laws. For the Streamlined States, at the end of the process, if the service passes, the company offering it becomes a Certified Service Provider – hopefully the certification programs prescribed in the MFA for non-streamlined states will adopt a similar system. The features CSPs offer can vary, but for the most part they manage every aspect of sales tax for the retailer—they calculate the sales tax due, file all the jurisdictional sales tax returns, manage tax exemptions, and even take care of any audits.

      Just over a year ago, I grew so tired of having to deal with the current complex and cumbersome task of remitting sales tax to other states that I began searching for some kind of solution on the internet. Fortunately, I quickly found a free service called TaxCloud, a SSUTA CSP service, which began managing my sales tax calculation, collection, and remittance for every tax jurisdiction in the United States. It was not only simple—it’s completely free of charge.

      The combination of this technology and the states’ simplification efforts ultimately unravels a huge web of entangling forms and paperwork, freeing businesses like mine from bureaucracy, promoting efficiency, and increasing productivity and, most importantly, profitability. They make dealing with sales tax much, much easier for small business owners.

      Small business owners like me truly benefit from the simplification of current cumbersome filing requirements and associated expenses. I want more and more states to simplify their sales tax laws, and I know that we need the MFA to make that happen. Therefore, I support the Marketplace Fairness Act.

      As I’ve learned more about the issue I’ve discovered there are many other reasons to support the MFA, but the reason I first found myself supporting this legislation is not one that I’ve seen addressed anywhere: it makes sales tax compliance very easy for small businesses (and probably for large ones, too). It’s particularly important for retailers who sell in multiple states, whether through a website or catalog or at state fairs and festivals.

      We all know that our states are facing major budget issues and need the revenue that the MFA will provide. Don’t get me wrong; I dislike taxes just as much as anybody—but I also don’t like finding out that that the ballot initiatives we voted for in my community are going unfunded because remote retailers are not required to collect the tax we already approved.

      To be clear, the MFA does not create any taxes or raise any taxes. It simply makes collecting the tax already due much easier for the millions of small business owners just like me. Consumers also benefit because they are relieved of the obligation to keep track of and remit the sales tax due on their individual state tax returns.

      Congress, I urge you—enact the Marketplace Fairness Act.

      • http://www.gbepackaging.com Bob Teal

        This guy is being paid to say its all good. No one would post this much unless they are selling something. Most of our customers are EBay and Amazon sellers and this would put them all out of business as customers still want the lower price and B&M stores do not have to pay taxes based on 50 states and 9000 tax entities. One tax, one state and we have no problem with that except it is a tax that will be wasted by our government and it will grow and grow and soon they will tax 20% and then 30% until it is more than you make. Then it will be too late.

        ** Control Government Spending ** Do not give them more money while we all are in hot water and our houses are worth less than we owe.

    • http://www.bloggershost.com Leonard

      This would be just plain WRONG!!! This makes you wonder how many of the people that came up with this bill have an online business or even spend any true amount of time online other than Facebook or other social networks.

      House Speaker John Boehner was more than correct when he said that the bill would put “a big burden on some very small businesses.” I write articles and other very small services that barely put gas in my tank and food on the table for my family. I would be crushed if this goes through the house and becomes law.

      How in the world would SSB’s (Super Small Businesses)or any small business survive such a law?

      Doesn’t our US Constitution provide protection against being forced to be hungry and destitute?

      Does it even matter any more? What about us?


    • http://salegreenhouse.tripleclicks.com greenhouseme

      If they want to do this then they should make it the same tax rate, tax laws and codes universal. It would be the same as Federal taxes, no difference where you live. Each state would lose in the long run. If your not on the internet and your traveling you pay the taxes in that state for the things you purchase and there is no headache. So why would an online business be any different. It will shut down many small businesses and cause a bigger recession. History repeats itself so is the government pushing us back to the recession of the 20’s.

    • http://www.graciousstore.com Gracious Store

      If the bill passes, the marketplace fairness act will cease to fair because of the enormous burden this will be on online businesses. How can a small business remit tax quarterly to all the 50 states? What time will the business have to do this and still have time left to run the business. Brick and mortar stores do not remit sales tax to all the states where some of their customers may come from.

      If the senate/ house want the marketplace fairness act to be truly fair, let online businesses collect sales tax from all their customers but remit all the taxes collected to their state of residence. In this way they will be doing exactly what their brick and mortar counterparts do.

    • Steve B

      Once again, a few people deciding the fate of the majority.

      • nan

        I was also wondering if the they thought about all the small county they have a different tax then say our capital and we here in Nevada must only charge what we sell if we are in that county. That’s a lot of extra work for us here.

    • http://www.graciousstore.com Gracious Store

      I think Goodlatte says it all. Asking online businesses to collect taxes, is not a establishing any “fair marketplace”. It imposes a lot of burden on these markers which their counterparts in brick and mortar stores will not even has a smell of.

    • Loki57

      This discussion is full of absolutely wrong information, any other issues of Constitutional law or practical implementation aside. It cannot work without massive simplification of tax laws and regulations, changes to how legislatures operate, and dealing with some very messy issues of religious and cultural discrimination in tax codes, often ignored by courts obligated to void laws with that intent or effect.

      In CT where slippery pitchman Sten is apparently from (and a very familiar state to me – I’ve run businesses there), every city and town fully incorporates the entire state’s land area, and those local corporate entities are by a lesser known precedent arising out of firearms regulation (Dwyer v Farrell) are all subordinate “creatures of the state”.

      In other states with stronger county governments (NY & VA make good examples), no “local preemption” in statute of case law, and a mix of local governments that are autonomous entities or subordinate to counties or states with unincorporated regions, things get far messier. There are often USPS fixed Zip Codes, but geopolitical entities that have different boundaries, and that shift with political land grabs or with development. It exists in CT but is far more common in TX to have utility district taxes, based on street addresses within a city or zip code, while in TX some people pay 8 to 12 taxes based on street address for utilities districts, fire districts, school districts, property, sales, income, etc. Most wide area software does not accurately implement those taxes.

      Some states have xtian bible based Blue Laws artifacts in sales tax codes, that exempt some items and tax others, including food counted as candy, soda, etc, but not other “foods” including stinky fish wastes or dead animal hoofs. Some jurisdictions, often states but sometimes counties or towns, have “tax holidays” for school items, hurricane preparedness, or other targets, for certain days and not others. Sometimes drug store items are taxed or not depending on how or why the same item is ordered, say OTC v Rx for sinus meds, batteries that can be used in glucose monitors or toys, etc., and where there’s no way to default code accurately based on the item or customer location alone.

      One of the lies behind this tax Bill is that B&M stores now comply with such laws. Both local merchants and national chains have high error rates in how they now charge taxes, missing some items and stealing from customers by wrongful taxation of others.

      Who’s read the entirety of the tax laws this Bill incorporates by reference? That means EVERY one of those state and local laws, implementing regulations and policy, and litigation precedents?

      A more complex lie is that there is a single party uniformly responsible for paying sales tax. Sten, if from CT, should know that theirs is one of the circular extortionate sales tax codes, that says customers are responsible for for paying and businesses for acting as collection agents, except if the business doesn’t charge, the customer is liable for reporting and paying, but that if the business doesn’t collect from the customer, it’s still liable to pay the state and in fact then owes the tax itself, separately and additionally to the customer directly owing the state. Consider how high profile items like cars, boats, and airplanes, often bought in one state and registered or licensed or documented in another, are laden with complications across tax jurisdictions, and extend that to dollar size items and software trying to keep up with weekend or 2 week long local exception shifts, or customer use of alternate purpose items, or street address and not zip code based location differences in taxes under present laws. Some sales taxes shift rates in local entertainment districts, for items nominally sold versus given as gifts by nonprofits versus businesses owned by nonprofits, with sales to commercial versus private user customers, etc.

      On top of issues of litigation across states and lack of valid legal jurisdiction of governments demanding payments from far away, what about audits? If a software package has errors relative to the above messes (and it’s nearly certain they will have more such defects than already exist), will 50,000 small businesses be forced to hire lawyers and accountants in 50 states and 50,000 local jurisdictions to hash out resolutions?

      One way this kind of Bill could address some of those issues is if it were linked to a modified “Fair Tax” as has been present and blocked in Congress for around a decade, and soon sees a Commerce Committee hearing. That tax ends the IRS as a criminal fraud and terrorist organization (inspect Philander Knox’s fraudulent certification as if ratified for the 16th Am, the 1895 SCOTUS ruling that such taxes are illegal, the Administrative Procedures Act fraud in the shift from BIR to IRS, and basic frauds of 1st, 4th, 5th, 8th, and 14th Am violations that cannot be remedied in an auditable definition of personal “income”). If the 501(c)x discriminatory elements of the IRS Code retained in the Fair Tax Bill could be removed, and issues of “prebates” addressed, that kind of Federal overhaul could set the stage for a more workable system of state sales taxes without so many inconsistencies.

      Consider, say, Amazon, Meritline, and NewEgg. What’s the selling entity, shipping entity, transaction location, and jurisdictional limits, when buying via each of their Web sites? Meritline has both CA and Chinese locations, and ships from a CA warehouse, some US drop shippers, its own Hong Kong, Singapore, and mainland China locations, plus from all sorts of jobbers, often drop shipping from the same warehouses that many nominally small resellers via a few large drop shippers use on eBay or Amazon merchants. Amazon…. is hard to define. NewEgg is moving to add Amazon like models, but is CA based (both the US state and Northern neighbor), with interesting logistics. To MidAtlantic locations, they mostly ship from NJ, sometimes TN or PA for large items that are common, from CA for small items, but just sent me a warranty exchange item from an OK location that may be a drop shipper to replace one sent originally from CA but that would have shipped from NJ had stock not run low. They have no legal nexus to any of my 4 possible receiving locations for different orders, while sometimes they act as a host to 3rd party Pacific rim merchants. In another case, I ordered from a WA based 3rd party merchant via a NewEgg special and found the order delivered ground in 2 days from an IN warehouse. In other online small vendor cases, an item ordered from an unknown location that may be USA, Pacific rim, or Slavic, is drop shipped from a Chinese owned NJ warehouse if to the Eastern USA, or elsewhere based on customer location, who’s doing business among what jurisdictions?

      Those companies have a LOT of investment in logistics. When Walgrens, CVS, Walmart, and tourist district B&M merchants ALL make errors under existing tax laws and complex quirks, how could those more complex logistics systems comply with a system that doesn’t ban smaller than state tax entities from being included, AND restrict seasonal or short duration promotional changes to rates or taxed items? How about purpose of use or type of customer variants for the same item, far beyond PITA issues of reseller or charity exemptions now?

      When drop shippers effectively acting as agents of larger distributors more than as real independent businesses are so common, and some of those operate dozens or hundreds of pseudo-entities for brand identity, or outright fraud that’s common among Chinese and rarely practical to enforce against (PayPal, Amazon, & credit card systems doing more than courts or cops), would this new tax law penalize companies with stable domestic locations, and enable various legal and quasi-legal business fictions to scam the system in yet more ways?

      A small USPS flat rate box sent to many countries around the world besides Canada typically costs $25, with customer packaging more, and DHL, FedEx, or UPS options generally higher. Is review of inter-jurisdictional tax systems an opening where we should be considering why USPS claims to need higher rates, when Chinese (et al) shipments to the USA often include a product and shipping for often under a dollar? Legal wages from 23 to 38 cents an hour in many Asian and African countries contribute to that, but as part of a global village, maybe this is a time to consider how our legal system, labor laws, jurisdictional systems, etc., are mismatched to a long term functional economy, and tossing states bones could be a political distraction by Congress from larger questions?

      There’s the obvious immediate issue of GOP extortion of the Federal budget, but what about the IRS’ basis in historic frauds as a criminal enterprise above the law? What about use of the US military for criminal violations of laws on genocide, war crimes, and political or economic wars of aggression? With a recent Oxford University study projecting 40% of less than very bright and educated people will within decades be unemployable in Western industrial societies, do we need a national guaranteed income system, alternate economy where people somehow can survive on far below minimum wage other than as prison industry conscripts, or what?

      Those both macro and micro issues somehow need to be reconciled to have tax policies that aren’t functional or Constitutional frauds. What changes are needed to make that possible, even if we didn’t have malicious or predatory politicians and a system were votes are bought by advertising campaigns, not won from informed, rational voters, who comprehend government and society?

    • BH

      This may not be the best bill, but we need to get sales tax collected by all merchants selling into an area that requires sales tax. We are B&M, we provide good customer service and are not about to go out of business. However our product is only about 20-25% margin. When customers can buy online and save 9-10% that is not fair. Most consumers do not care about the cost of doing business they are looking at their total cost. Quality B&M stores are working hard to make a living just as much as quality online retailers. When you can warehouse your product in a low cost real estate area and ship it into a very high cost real estate area you naturally have an advantage. The technology cost to figure out how to properly play by all the jurisdiction rules are part of the cost of doing business. No rule says that all online businesses need to sell into all tax jurisdictions. If you can’t handle the collection process, don’t sell in that market.

      • Rick

        “This may not be the best bill” – BH.
        Then rewrite it. Sorry, this is a crappy bill with huge burdens on smaller retailers. This big-box retailer funded new tax will not solve small business woes, sorry… it just won’t.

        It’s an unprecedented power grab by states across state lines. How about, if you local retailers feel free to sell online as well. We don’t have physical presence in the state or representation.