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Does Jason Chaffetz Need to Investigate Himself?

Jason Chaffetz is the new chairman of the House Oversight and Government Reform Committee. One of his roles is to clean up government. He may need to start with his own office.

Until a few months ago, Mike Jerman worked as Jason Chaffetz’s Legislative Director. For a long time Jerman has been working hard on remote sales tax collection legislation. Chaffetz himself explained in meetings with eMainStreet members that Jerman was the driving force in his office behind the Remote Transaction Parity Act (RTPA), a modified version of the Market Place Fairness Act, which Chaffetz has announced that he will introduce on Monday. Documentation shows that last year Jerman was working assiduously to marshall support for the RTPA. Chaffetz told several of our members that Internet Sales Tax legislation has long been Jerman’s “baby” and that Jerman was a passionate, personal proponent for the legislation.

The RTPA requires retailers to use government-mandated software for sales tax collection purposes if they want to receive certain protections – protections that all of them need, ensuring a mountain of business for the companies that make the software. In fact, the software can only be provided by a small number of authorized companies that the legislation refers to as Certified Software Providers. As early as last year Jerman addressed the governing board of the organization that chooses these software providers.

The Certified Software Providers have announced that the legislation’s mandates could require millions of small businesses to use their software and generate billions in financial windfalls for them, all at the stroke of a pen.

Putting regulatory burdens on small business – and creating industries from these regulations – is, unfortunately, something that Congress regularly does.

But that’s not the end of the story. It’s what is happening now that is raising eyebrows.

Almost exactly coinciding with the timing when Representative Chaffetz announced that the RTPA was ready to be introduced, Jerman left Chaffetz’s staff and joined a company that is pursuing Certified Software Provider status from the same organization Jerman previously addressed – immediately putting himself and his company in line to reap a fortune if the law were to pass.

This is an egregious example of the revolving door, crony capitalist, insider dealing that disgusts rank-and-file Americans. It is exactly the type of behavior that the chairman of the House Oversight and Government Reform Committee should be working to stop. Chaffetz’s newly departed legislative director positioned himself for private enrichment while Chaffetz enables it, and all the while more burdens are heaped on small businesses.

The behavior Chaffetz has enabled is wrong. Those who have been put in charge of reforming government should take a stand against it, not participate in it.

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Marketplace Fairness Act Is Not Fair To The Marketplace

A compelling new op-ed was published by The Hill today. It was written by Drex Davis, co-founder of eMainStreet Alliance, and producer of the often referenced Marketplace Fairness Act (MFA) short video series.

Davis has exposed an alarming loophole in the legislation that would bury small remote sellers and allow big retail to dance on their graves.

“Consider this – the bill is written so that a Minnesota-based Big Box store located near the Wisconsin border can escape a tax audit from Wisconsin even though that store sells tens of millions in goods to Wisconsin residents. Yet, the MFA would expose a small Minnesota business to the threat of a tax audit from Wisconsin for making a single sale over the Internet to a Wisconsin resident.”

Proponents of the bill claim they are seeking a level playing field, but don’t want to live by the same laws they are proposing. Drex Davis goes on to say…

“In fact, small online retailers would face the threat of up to 46 sales tax audits per year, while the Big Box store would face the threat of only one. This is the exact opposite of “fairness”..”

The Marketplace Fairness Act passed with 69 votes in the Senate, but it had to maneuver its way around legislative vetting by dodging committee scrutiny. Once the bill reached the House, John Boehner (to his credit) sent it to the Judiciary Committee where the veil has been lifted and the harm to American small business can be clearly seen. This has led to Chairman Bob Goodlatte releasing 7 Basic Principles to Remote Sales Tax. Chaiman Goodlatte’s guidelines are a much more responsible approach to remote seller tax collection obligations.

Contrary to what Big Retail lobbyist’s claim, the MFA doesn’t close tax loopholes, it writes regulatory loopholes into law.  Please read, comment and share the points made here in today’s published op-ed and encourage your representatives to stand against the Marketplace Fairness Act because it is not fair to the marketplace.

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David Campbell’s Letter to Representative Boehner

Tax Cloud’s CEO David Campbell has history of misleading elected officials. So, we weren’t surprised when he did it again this week in a letter to Speaker Boehner. In his letter, David Campbell claims that the MFA must be passed now to … wait for it … protect small online sellers.

Say what?

Rick Smith from MarketplaceFairnessCoalition.org just released a brilliant and devastating rebuttal to the letter.  Please read the rebuttal and spread the word. We’ve already reached out to Boehner’s office and other members of Congress with Smith’s rebuttal/fact-check but the more people who call and set the record straight, the better.

 

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Senator Enzi doesn’t understand his own Marketplace Fairness Act

Senator Enzi from Wyoming is the lead sponsor of the Marketplace Fairness Act in the Senate.

Yesterday on the Senate floor he said many things about the MFA that were false, but the most head-scratching statement he made was when he said government-mandated software was so easy to use that “all [sellers] have to know is the [customer’s] zip code.”

Come again?

Anyone who knows anything about sales tax collection knows you cannot find the sales tax rate of a jurisdiction using the zip code.  The reason is that multiple jurisdictions overlap zip codes.  You have to know an exact street address to know which jurisdiction’s rate to apply.

The senator who sponsors the Marketplace Fairness Act doesn’t understand that sales tax jurisdictions do not map to zip codes?

Say it isn’t so.

Watch the startling admission below.

 

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1,000 Retailers Affected? Try 3.5 Million.

Proponents of the Marketplace Fairness Act have made the preposterous claim that this bill would only affect 1,000 retailers. This talking point has been repeated on the Hill many times. Here is a clip of Dick Durbin making the preposterous claim during a Congressional hearing:

First, we must point out the obvious. There are tens of thousands of small business who have joined coalitions like ours, including the We R Here Coalition and eBay Main Street to fight back against MFA. If only 1,000 retailers will be affected why are there tens of thousands who have joined our groups and are actively fighting to defeat the bill?

Second, in the clip above, Senator Durbin claims that there are only 11 retailers who will be affected by the Marketplace Fairness Act in the entire state of Oregon. Let the record state that we have more than 11 Oregon business owners in the eMainStreet Alliance and none of our Oregon members were named by the Senator. We have provided names and included signatures of Oregon businesses in our letter to Congress.

Third, the actual number of small businesses that will be adversely affected by this bill could be in the millions! But, don’t take our word for it; Rick Smith of MarketplaceFairnessCoalition.org recently discovered a hidden video by FedTax/Tax Cloud–a Certified Software Provider (CSP) that has openly lobbied for the passage of MFA– wherein they assert that the MFA will affect up to 3.5 MILLION retailers!

“Between 350,000 and 3.5 million retailers will be impacted by the new law ….” — Tax Cloud Video

We believe that if there is a small seller exemption in the bill, the number of affected small businesses would be close to the number Tax Cloud (Fed Tax) reported: 350,000.  Furthermore, proponents plan on getting rid of the exemption over time so that every remote seller in American will be entangled by this bill. So, even if ‘only’ 350,000 are affected at passage (with a small seller exemption in place), 3.5 million retailers will ultimately be impacted by compliance burdens and unfair regulations.

Once their video’s existence was discovered, Tax Cloud pulled it from the web and filed DMCA takedown notices against parties that repost it. But that won’t work. The cat is out of the bag and the veil has slipped. You can read the full transcript of the video and watch the clip in question here. The link also provides more details about Tax Cloud efforts to hide their revealing (and pernicious) video secret.

 

 

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Secret Video Uncovered – Tax Cloud Says Marketplace Fairness Act Will Affect up to 3.5 MILLION Retailers

We’ve taken issue with Tax Cloud/Fed Tax and their CEO David Campbell before. Campbell has repeatedly made misleading statements to the public, to the media and to elected officials about the capabilities of his sales tax software and the impact of the MFA. You can read more about that here and here.

Tax Cloud/Fed Tax, Avalara and other CSPs (Certified Software Providers) stand to make billions of dollars if MFA/MITFA gets rammed through.  They know that if the MFA passes, it will impact an enormous number of small businesses and they are rooting for just that so they can profit off the ensuing burdensome regulations.

The problem is, up until now, proponents of the MFA – including the Certified Software Providers – have grossly (and we would argue, purposely) understated the real number of individuals and small businesses that would be ensnared and impacted by the MFA so they can convince lawmakers that it will only hurt a small number of small businesses.  Proponents have been coy (at best) and downright dishonest (at worst). Some have even suggested it will only affect a thousand retailers (that is the downright dishonesty we’ve been talking about).

Nevertheless, the veil has slipped. A promotional video by Tax Cloud was recently uncovered by Rick Smith of MarketplaceFairnessCoalition.org. In the video Tax Cloud / Fed Tax admit the real impact of the MFA:

“Between 350,000…and 3.5 million retailers will be impacted by the new law ….”

Tax Cloud also suggests a potential windfall for their business:

“…an opportunity of 1.3 billion dollars for Fedtax.”

Once the video was discovered, Tax Cloud pulled it from the web and they have filed DMCA takedown notices against parties that repost it. But that won’t work. The cat is out of the bag. You can read the full transcript of the video and watch the clip in question here.

We have made countless calls to lawmakers over the past two years and even visited personally with many of them. In many  of those meetings they’ve said that proponents, including the certified software providers, told them that the legislation would only affect a thousand retailers or so.

Please use the Tax Cloud transcript when you go and visit or call your representatives about this issue.  It is quite compelling to show what proponents are admitting when they think nobody is paying attention. 

 

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More New Videos From eMainStreet

eMainStreet Alliance successfully rolled out a Marketplace Fairness Act series of videos last week.

Response to the first two videos was so encouraging we’ve released 4 more ahead of schedule.

Please subscribe to the eMainStreet YouTube channel to view all of our videos.

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New Videos from eMainStreet

eMainStreet is rolling out a series of videos to educate small businesses and consumers about the disastrous consequences of the Marketplace Fairness Act.

Please subscribe to the eMainStreet YouTube channel.

The first two videos have been released.  More will soon be coming.

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The Marketplace Fairness Act would be as disastrous as Obamacare

eMainStreet Member McKane Davis makes the persuasive comparison in an op-ed published by The Daily Caller.

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A.C.A. Software Failures Prove the MFA is a Small Business Killer

We’ll  point out the obvious – the web software roll-out for the Affordable Care Act has been an unmitigated disaster and complete failure by any measure. It has been marked by major software failure and systemic problems. There are hundreds of articles on the web detailing what has gone wrong. Continue Reading →