E-commerce merchants are saying “no,” to a proposal that would force them to collect sales taxes from their online customers.
With the support of retail giant eBay, We R Here, a coalition of small online sellers formally launched this Wednesday, stating their intentions to lobby against the federal bill.
We R Here, stands for Web-Enabled Retailers Helping Expand Retail Employment. The group formed just about a month ago and are the latest voice adding to the long-running, controversial debate. At the group’s launch, several Web-based sellers underscored how hard their small businesses will be hit through an online presentation. Sellers say they will incur more costs and may even have to close if they are forced to collect taxes in the more than 9,000 jurisdictions across the country.
Online clothing storeowner Brandi Tolley for example, said she’d have a hard time because on her own, she wouldn’t be able to keep up with the assortment of tax codes. The Army veteran and mother of a special-needs child who runs Buy Big from Brandi out of Springfield, Ill., said she would have to hire additional staff in order to survive.
The coalition, which has over 1000 members, is calling on Congress to oppose such bills that have already been offered in the House and Senate.
Online purchases are already subject to taxes in states with sales-tax laws, but the U.S. Supreme Court has held that only retailers with a physical presence in a state are required to collect the tax.
Congress can change that however, through legislation. But without action at the federal level, the courts have affirmed that states cannot impose the collection requirement.
That ruling was made before the advent of Internet commerce, leaving it up to consumers to report and pay the tax on purchases outside the state if the retailer does not collect it at the time of purchase. The requirement known as “use tax,” is something that most consumers are unaware of or simply choose to ignore, prompting complaints from state tax administrators who have reported revenue shortfalls.
We R Here’s goal is to put a human face on the issue. They believe that requiring small online sellers to keep track of state and local tax codes across the country, is an overwhelming burden that could put many out of business.
The group’s leader Phil Bond, says it’s not the job of small businesses to collect sales taxes where they don’t have a business presence and where they don’t receive government services.
Bond who previously served as president of Tech America under the Department of Commerce, called the sales-tax proposal “unfair and unwise, ” as it affects jobs; a hot button issue among lawmakers.
Two similar bills in Congress may make life easier for small online business owners. Both still require that online sellers collect state taxes, but only after the states have taken steps to simplify their tax codes. Each bill also includes an exemption for smaller sellers: the House version sets a threshold of $1 million in annual revenue, while the Senate bill caps the exemption at $500,000.
eBay has been promoting the launch event on its site and has posted a link to the news release announcing the new coalition on its Main Street policy page. Specifics about the retail giant’s involvement with We R Here, is not known, since a representative for the company did not immediately respond to a request for comment.
eBay has adamantly opposed Sales-tax legislation, making it one of the company’s chief policy concerns. Rival Amazon however, has taken a different approach by supporting a federal measure to streamline sales taxes and override various state efforts to require outside retailers to remit the tax.