eBay encourages sellers to oppose Senate’s pending online sales tax bill

[DainBramaged]

On Sunday, Reuters reported that millions of eBay users woke up to an e-mail from Chief Executive John Donahoe. Donahoe reached out to argue against pending federal sales tax legislation in the Senate, encouraging merchants to lobby their representatives quickly.

The Marketplace Fairness Act is set to be voted upon within the next several days. It empowers states to compel retailers outside their borders to collect sales tax for online purchases. In other words, an Illinois retailer shipping to a Californian would now be required to collect California sales tax then send that money back to the Golden State. At present, states can only require this of companies that have an in-state physical presence.

However, there is currently an exemption for retailers that make less than $1 million in out-of-state revenue—but Donahoe pushed for this limit to be raised to $10 million, or for the exemption to cover companies with less than 50 employees.

"This legislation treats you and big multi-billion dollar online retailers—such as Amazon—exactly the same," Donahoe wrote. "Those fighting for this change refuse to acknowledge that the burden on businesses like yours is far greater than for a big national retailer."

http://arstechnica.com/tech-policy/2013/04/ebay-encourages-sellers-to-oppose-senates-pending-online-sales-tax-bill/

[bemildred]

1. I support online sales tax for any on-line commercial operations.

Level the playing field with local business a bit, I say.

[RC]

2. So, a one or two person hobby business would have to collect sales tax from each state they shipped

to?

Way to run small businesses out of business.

[hollysmom]

3. when I started selling my Mother's excess stuff on E-bay,

my accountant said it was like a garage sale, a trade of money for used goods already in my possesion, no tax needed. However, people who make a living off e-bay and purchase things to sell, should pay taxes.

[bemildred]

4. If you are running a business to make money, like Sched. C?

Then your customers should pay sales tax, yes. And it is completely unfair to said small local businesses for them to have to collect tax (as they do with local customers) while Amazon etc. do not.

[Sgent]

5. The problem is cost of compliance

the only software I know of that deals with sales tax in this matter costs about 50,000 plus 20,000 / year -- and that's a library that you use, you still have to write your own interface into your selling system. In addition due to sales tax specifics (cold medicine is taxed, but Tylenol isn't, etc.) in each jurisdiction, adding an item to inventory is a complex issue requiring some degree of tax expertise.

In addition, if you make one sale to a jurisdiction you will have to file a return there indefinitely -- there are currently 10,000 sales tax jurisdictions meaning even a moderate seller could end up filing 1,000's of monthly returns.

The current sales tax system is simply unworkable for even moderate size internet sellers -- which is why Amazon supports this bill as it gives them a competitive advantage (same costs but over billions of sales).

The new law improves on this, but it still doesn't go far enough especially for smaller retailers. Remember, depending on the industry, 1,000,000 in sales could mean only a 50,000 - 100,000 gross profit, after which you have to pay all of your operating expenses.

[bemildred]

6. Well, this is awkward. The last thing I really want to do is defend the sales tax.

However, I do want Amazon to collect and pay the sales tax for any state it sells into, since otherwise that leaves them with an advantage over Mom & Pop, who will have to collect it, anyway, already, if they want to be legal, in their state, unless the state has no sales tax.

I quite agree that it should be for the states to argue about how to divide the proceeds up, not Mom & Pop. If Mom & Pop sell in state X and collect state X tax while doing so, they should be done. California already goes after consumers on their state tax returns, for internet purchases, but it's voluntary (i.e. not enforced).

On the other hand, if state X has no sales tax, and Mom and Pop want to sell in California, which does, then they should collect CA tax like CA businesses have to. So basically don't sell here if it's too much trouble.