Coalition against proposed internet tax
We recently reported on a coalition fighting against proposed federal legislation that could implement an internet sales tax to businesses that are solely online, which the coalition says could impose a burden on small businesses.
In 1992, the U.S. Supreme Court made the decision that forcing online businesses or individual sellers to pay sales tax for states in which they do not live would be burdensome. However, some have decided that they want to override that decision and make online retailers pay sales tax based on which state each individual sale came from.
That means that online retailers would have to calculate every transaction and stay on top of each state’s changing sales taxes. Technologist and advocate for the Marketplace Fairness Act, Sten Wilson tells AGBeat there are tools to simplify this accounting process that make it simple, and automatic to collect these taxes.
The We R Here Coalition is taking a stand against these taxes, seeking to take a united front, to come together and loudly voice why this is a bad idea, not just for the business owners themselves, but for the country. Anyone can get involved, through the coalition by signing up and/or signing the petition, claiming the nation needs to “create a fair marketplace for all types of retail businesses to thrive and innovation to prosper.”
Arguments based on facts from 1992?
Wilson asserts that the arguments the Coalition (which he says is backed by eBay) puts forth are founded on arguments based only on 1992 facts. “The very same API protocols used to provide real time shipping to over 40,000 different postal zip codes was not available in 1992 either. The very same API protocols now provide real time tax calculations in less than 13 milliseconds to any enabled shopping cart or checkout platform.”
“In addition,” Wilson continues, “small businesses such as mine receive indemnification against any audit issue that might arise from wrongly provided state data or applications by CSPs. Twenty four states currently utilize one standard e-file remittence process making it much. much easier for millions of Internet merchants. The current proposed legislation S.1832 the Marketplace Fairness Act requires any state seeking collection authority to adopt similar simplification standards.”
Many believe implementation of these sales tax are regressive, but Wilson points to the unequal application of taxes online and offline, with Michael Mazerov from the Center on Budget and Policy Priorities bringing to his attention the ongoing impact of inaction upon those families with limited or no access to the Internet and sufficient credit, with many states (CA, CT, NY, RI, etc.) compensating for evaded sales and use taxes by increasing property taxes, existing sales taxes, and other state fees.
Additionally, Wilson points out that families without credit and access to the web pay higher taxes at local businesses as their “wealthier counterparts” skip taxes by purchasing goods online, without consequences typically reserved for evading any taxes.
Benefits of automating sales tax processing
“Many states will also benefit through automating sales tax processing,” Wilson notes. “New efficiencies ensure a greater percentage of every tax dollar honorably remitted fund intended programs and service supported through residents ballot initiatives. This is another example of how the proposed legislation will assist in providing states the means to undue other harmful and costly tax policies lowering individual liabilities.”
Wilson gives credit to eBay for “exploiting” the loophole for so many years, “But now when state universities, medical, and infrastructure can no longer keep up with constituent supported ballot initiatives we all need to look at what is best for individuals, families, businesses and governments,” he tells AGBeat. “The very same technology enabling efficient and profitable marketplaces on the Internet greatly simplifies tax processing increasing profitability for all businesses.”
Attitudes of eBay and NetChoice
After attending many hearings on the issue, Wilson says he is “disgusted” with the attitudes displayed by eBay, NetChoice, and Overstock who all maintain the 1992 assertion that the taxes are “too burdensome,” despite companies like Amazon supporting legislation the enable States’ rights to “efficiently collect taxes already due.”
Wilson closes with the notion that, “Back in 1992 the smartphone did not exist nor did the millions of technological advances making the Internet marketplace a vibrant reality. Today in 2013 I can process credit cards with my smartphone or iPad, and my sales tax processing is completely automated providing my business with new found efficiencies easily eliminating the costly legacy administrative burdens of 1992. It’s pretty obvious to me what eBay is so frightened of.”
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Additional reading
- Coalition fights internet tax that could threaten small business
- Wilson’s guest post on Forbes, “Why I support the Marketplace Fairness Act”
- Podcast: eBay talks about the Coalition
- New coalition formed to oppose e-commerce tax proposals
- Small e-retailers mobilize to lobby against online sales tax
- Marketplace Fairness Act Information
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Keith Yockey
January 22, 2013 at 11:43 am
What the article fails to address are the actual costs to businesses both in paperwork, IT cost and fees. Many estiments show this cost to be as much as 15% for every tax dollar collected.
There is a reason why only 24 States have joined SSUTA. It too is a flawed system that takes away States’ Rights to tax as they see fit.
WE R HERE Coalition
January 31, 2013 at 10:49 am
When something sounds too simple or too good to be true, it usually is. That is the case with the claims in this article. Wilson argues that tools are available to simplify the burden of the potential Internet sales tax-collecting process. While we at WE R HERE would like to believe in Mr. Wilson’s magic software solution, these tools may not be as ready-to-use as Wilson claims.
Should the federal government complete its mandated over-reach and force small web-enabled retailers to become tax collectors, the potential of having to assess, collect and remit sales taxes from customers in nearly 10,000 jurisdictions is a burden many business owners cannot handle. Take Doug Shaddle. He points out in the recent article “Looming Internet Sales Tax Puts Pinch on Online Retailers” in Engage Today that if the Marketplace Fairness Act passes, retailers — many of whom have little or no help running their business — would need access to accurate, nationwide sales and use tax jurisdiction information.
Shaddle goes on to note:
“Today, this is done using a process called ZIP code taxation where the customer’s ship-to ZIP code is used to determine their tax.Although ZIP codes provide an easy way to determine sales tax, they have inherent characteristics and limitations that consistently cause ongoing and expensive problems for tax jurisdiction assignments.First of all, ZIP codes don’t always correspond to jurisdiction boundaries. In addition, ZIP code coverage changes frequently.Further complicating the landscape, some states require that jurisdictions correspond not just to ZIP code requirements, but to political or census boundaries as well, which ebb and flow along with local populations.”
Needless to say, more needs to be done to convince small web-enabled retailers that collecting sales taxes for states where they do not live, have no presence and receive no government services is not a burden on them and their business. It is irresponsible for the government to put the burden of becoming a tax collector on the back of America’s web-enabled retailers.
FedTax
March 10, 2013 at 5:57 pm
The software is not “magic” and you (“We R Here” coalition) know it.