S 1452 and HR 2701 would create a federal mandate forcing all retailers to collect and remit taxes for any streamlined sales tax (SST) member state — even if the seller has no physical presence in the state.
It‘s a cruel irony to call this job-killing bill the “Main Street Fairness Act.” Online sales are about the only way small retailers can survive being steamrolled by the big-box chains who are behind these bills.
The stated purpose of the Main Street Fairness Act is to “level the playing field” between online sellers and traditional brick-and-mortar retailers by requiring online sellers to collect sales taxes on purchases from states where the seller has no physical presence. This mandate would apply even if the seller’s own state has no sales tax at all. In reality, this bill would impose new and disproportionate collection burdens on exactly the sort of small businesses that lawmakers hope will create jobs in an economic recovery.
According to the SSTP’s own study, small businesses spend 17 cents of their own money to collect and file every dollar of sales tax they send to their home states. This bill would force small online retailers to collect for two dozen states, requiring expensive software updates, inviting exposure to an army of auditors, and cutting into resources they’d rather spend on building businesses and creating jobs.
Of all the problems with the Main Street Fairness Act, one of the worst is that it fails to define safe harbors for small businesses that could be crushed by a new, multi-jurisdictional collection regime.
NetChoice Press Release on Sen. Durbin’s Main Street Fairness Act
NetChoice Testimony to Maryland Regarding Online Tax Collection
NetChoice Testimony to Pennsylvania House Legislators for Hearing on Online Tax Collection
Maryland’s Attempts To Hunt New Tax Revenue Without Shooting Itself In The Foot
Can You Kill a Bad Bill in Only 180 Seconds?
New estimate of uncollected taxes from e-commerce
October 17, 2011 at 4:54 pm
Technology today can calculate shipping costs in seconds for almost any location in the world. Ebay, Overstock and many others all maintain that multi-jurisdictional interstate sales tax calculation is too difficult, however all maintain vast computer infrastructures capable of keeping track of millions of global transactions including commissions, cost of goods, and even incredibly complicated Value Added Taxes, Provincial Taxes and many other taxes and fees across many different country borders. I assure you sales tax calculation, collection and remittance for online sales tax legally due is easily accomplished.
The Main Street Fairness Act will assist many businesses of all sizes to realize unknown profits making them more competitive. The online component of my business is in its infancy. After examining possible avenues of growth I was immediately confronted by the tremendous burden of tax collection and remittance in my own state as well neighboring states. I said to myself, “there has to be a better way!” So I turned to the Internet.
There is a simple solution: TaxCloud (http://taxcloud.net).
The statements by large Internet merchants and others continue to confuse me. My company now utilizes a PayPal checkout button seamlessly integrated with TaxCloud.net. Now my business is enabled to calculate, collect and remit 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 legally due sales tax simplifying my customer’s lives, why is it so hard for Ebay, Overstock and their affiliates as NetChoice claims?
Technology available freely on the Internet (like TaxCloud) is more than capable of seamlessly 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, multi-jurisdictional sales tax calculation and remittance is easily accomplished. TaxCloud accurately calculated sales tax for any jurisdiction for any state in less than 13 MILLISECONDS!
So what is the real reason Ebay and other companies choose to evade supporting our schools, hospitals, infrastructure, libraries, public parks and so much more by refusing to easily collect and remit sales tax legally due?
It is clear that the real burden of sales tax falls upon the consumer, and there is no burden to business of any size. Any business can easily calculate, collect and remit sales tax legally due utilizing modern technology while simultaneously realizing greater efficiencies and profit. Consumers truly benefit by eliminating the burden of having to track and remit sales tax due on Internet purchases.
The MSFA (Main Street Fairness Act) is proper legislation enabling states rights to collect sales tax legally due while maintaining states individual rights to tax independently. Remember the Boston Tea Party. Origin based sales tax fails to maintain state’s Constitutional autonomous taxing authority.
Unrealized to most consumers are the true costs of permitting and embracing the illegal practice of tax evasion. This year Connecticut enacted the largest tax increase in it’s history. The increase included eliminating clothing exemptions, raising the sales tax rate %.35, %1 on all luxury goods over $1000 and tax on alcohol went up %20. CT is not alone. West Virginia now taxes groceries to make up for lost sales tax revenues resulting from increasing convenience of online shopping. Rhode Island as well as doubled, that’s right a %100 increase, on all park entry and parking fees. Property taxes in states such as NY have increasing at an alarming rate to maintain funding primarily for education.
Lower income wage earners are actually the hardest hit. Without the means and available credit to participate in online sales their only option is to shop locally paying increased sales tax rates, such as in CT, paying the tax bill for those who selfishly continue to evade their tax obligations. More interesting is the fact that for every million dollars in sales a brick and mortar company provides 3.8 jobs, while large online merchants provide only .8 jobs for the same amount of sales. Tax policies are not created or imposed to provide segregation of businesses. The passage of the MSFA will level the playing field benefitting many businesses and workers in every state.
Sales tax is a fair and impartial tax billed directly to the consumer and in no way harms businesses when applied fairly and equally. Mall vacancy rates are now over %20 nationally and increasing as more brick and mortar stores continue to close their doors. As more stores close jobs are lost, homes are lost and…. you get the picture. The real burden is now upon the millions of small businesses who provide many more jobs and opportunities to find ways to compete with the large Internet retailers.
The real burden today is upon the consumer and the many small to medium d businesses being consumed by misinformation. I discovered that by progressively employing modern technology my small start up business is now able to compete in any state without fear of nexus laws or affiliate relationships, and is more efficient and profitable. The Main Street Fairness Act will enable states rights to collect sales tax legally due providing much needed revenue, create and save many jobs, and most importantly permit states to eliminate other harmful taxing methods while simultaneously removing the many burdens confronting businesses today.
I applaud Amazon for their Integrity publicly supporting the Main Street Fairness Act.