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The Costs of “Free” Software – An Important Study by TruST

This post references a cost study by TruST, which you can download here.

My name is McKane Davis. I’m the President of Scrapbook.com and co-founder of the eMainStreet Alliance. Scrapbook.com is a family business, and we sell craft supplies though our website and other channels online. I personally oversee all technology for our business and I am a software developer. So I am intimately familiar with software integrations and how they will affect my business and other businesses. Continue Reading →

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David Campbell CEO of FedTax has a TruST Problem

In 2012, in a letter to the Governor of Maine, David Campbell, CEO of FedTax, tried to garner support for remote-seller use-tax collection legislation by claiming that any retailer that uses a shopping cart or order management system could integrate and use his third-party tax collection system in 20 minutes (or less).

Any retailer that uses an online “shopping cart” or order management system can register with our service and be ready to collect sales tax in 20 minutes (or less), no matter how small they are.” (emphasis added) — David Campbell (CEO, FedTax)

Many members of eMainStreet have been offended by this claim, not only because it is patently false, but also because proponents of the MFA have been using Campbell’s false claims, like this one, to mislead lawmakers.  Today, in response to a study about the true costs of sales tax software by TruST which blew up this falsehood, Campbell admitted that his software – TaxCloud – does not do what he previously claimed. Continue Reading →

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Do Customers Shop Online To Avoid Sales Tax?

Proponents of the Marketplace Fairness Act (MFA) have repeatedly claimed that U.S. customers are shopping online en masse primarily to avoid paying sales taxes. In fact this claim is the lynchpin of their “fairness” argument (the argument that local retailers are at a pricing disadvantage vs. remote sellers and therefore the Marketplace Fairness Act is necessary for fairness). If customers are not going online to avoid sales taxes in droves then the fairness argument falls apart.

Shopper Approved recently ran an expansive study on why Why People Shop Online. They implemented a post-transaction survey on over 200 online stores and they asked over 25,000 customers: “What key factor influenced you to buy online instead of locally?”. They gave respondents six, randomly sorted options (Larger selection, Better pricing, More convenient, Time savings, Easy to compare, No sales tax and Other).

So what drives people to shop online? Is it, as MFA proponents argue, to avoid paying sales tax?
Continue Reading →

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Chairman Goodlatte’s Guidelines on Internet Sales Tax

House Judiciary Chairman Bob Goodlatte has released seven principles that establish requirements for any Remote Seller Tax Collection legislation.  The Marketplace Fairness Act (MFA) is incompatible with all seven principles, rendering the MFA non-viable in the House of Representatives. The principles are reasonable and, inasmuch as they are all followed with exactness, they are in harmony with the eMainStreet stance. While Chairman Goodlatte’s principles establish a fixed, minimum threshold for any future legislation, they do not constitute an admission that the current standard – physical presence – should be changed. In fact, the current physical-presence standard satisfies all seven of Chairman Goodlatte’s principles.  We are also pleased that the American people are overwhelming opposed to legislation that violates these principles.

Please see Rep. Goodlatte’s official press release and our eMainStreet stance for more information.

Rep. Goodlatte’s Basic Principles on Remote Sales Tax

1. Tax Relief – Using the Internet should not create new or discriminatory taxes not faced in the offline world. Nor should any fresh precedent be created for other areas of interstate taxation by States.

2. Tech Neutrality – Brick & Mortar, Exclusively Online, and Brick & Click businesses should all be on equal footing. The sales tax compliance burden on online Internet sellers should not be less, but neither should it be greater than that on similarly situated offline businesses.

3. No Regulation Without Representation – Those who would bear state taxation, regulation and compliance burdens should have direct recourse to protest unfair, unwise or discriminatory rates and enforcement.

4. Simplicity – Governments should not stifle businesses by shifting onerous compliance requirements onto them; laws should be so simple and compliance so inexpensive and reliable as to render a small business exemption unnecessary.

5. Tax Competition – Governments should be encouraged to compete with one another to keep tax rates low and American businesses should not be disadvantaged vis-a-vis their foreign competitors.

6. States’ Rights – States should be sovereign within their physical boundaries. In addition, the federal government should not mandate that States impose any sales tax compliance burdens.

7. Privacy Rights – Sensitive customer data must be protected.

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Why Does Amazon Support the Marketplace Fairness Act Now?

Amazon has shifted their position on Online Sales Taxes. First they were vehemently against it and now they are for it. Why the shift? Very simply, Amazon has realized that this is a way to exploit their smaller competitors and get an advantage. Amazon, can foist a burden on smaller companies while finding ways to exempt themselves from the law. Like Walmart, Amazon sees this as a way to crush smaller competitors while using their political might and lobbying power to get exemptions and abatements from the law.

Forbes published a blistering op-ed by Katie McAuliffe today titled “Amazon Can Support The Internet Sales Tax Because Amazon Is Exempt“. It’s an important read for anyone concerned with the Marketplace Fairness Act.

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Small Business Owner Radio Interview on Marketplace Fairness Act

Peter Olodart (Tacoma WA), small business owner and eMainStreet Alliance member was interviewed by CBS Local on the Mark Reardon Show.
Olodart talks in-depth about the Marketplace Fairness Act and how it would affect his business and employees. Listen to the complete interview here.

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Looking Deeper at the Marketplace Fairness Act

CPC strategies recently published an in-depth look at what the MFA would do to small online retailers. The piece by Jon Gregoire, which features an interview with Susan Linsday of SundryShop.com, looks at the effects of the pending legislation on small businesses.

This is one of the most in-depth pieces on the Marketplace Fairness Act and it gives a more personal picture of what this legislation would do to a small business.

You can read the entire piece here.

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Showrooming and the Internet Sales Tax

“Showrooming” is the practice where someone looks at a product in a brick and mortar store and then buys the product online.  Retailers supporting the MFA say it is the “no sales tax paid online” that is causing people to “showroom”.  They hope to convince lawmakers that sales tax rules are driving “showrooming” and therefore the MFA can be a “tool” to remedy their struggles.

Only there’s a problem for proponents of the Internet Sales Tax or Marketplace Fairness Act (MFA) – solid survey data shows showrooming rarely occurs.

Proponents of the MFA use a lot of anecdote about showrooming but very little data.  These anecdotes are often very emotional and, therefore, persuasive.  However, just because an event occurs a few times does not mean it is occurring frequently.  Let’s look at the data. Continue Reading →

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eMainStreet Member’s Op-Ed Featured in The Wall Street Journal

eMainStreet member Rick Smith’s op-ed was featured today in the Wall Street Journal. This is an excellent piece that addresses so many of the problems with the MFA and Internet Sales Taxes in general. We’re glad to see honest pieces like this get the attention they need and deserve.

You can read Rick’s op-ed about the Internet Sales Tax here.

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TaxCloud, David Campbell and the Marketplace Fairness Act

TaxCloud is a sales tax calculation software made by the for-profit company FedTax. If the Marketplace Fairness Act passes, tens of thousands of small businesses will be forced to use either FedTax’s TaxCloud software or software provided by one of the other five certified software providers (all of them for-profit businesses).

FedTax would likely profit handsomely if the Marketplace Fairness Act (MFA) were to pass. In Fact, collectively, certified software providers could make hundreds of millions of dollars at the expense of taxpayers and small businesses.  One of the other certified software providers, Avalara, has already raised around $49 million in Venture Capital funds from Benaroya, Pioneer Venture Partners, and Sageview Capital.  One venture investor said that the VCs believe the MFA could be  “a big driver and a catalyst for the industry.”  David Campbell, FedTax CEO, appears to be pursuing big investment dollars, too.

“We are building contacts with institutional investors,” – David Campbell, CEO of FedTax.

David Campbell and his company FedTax will benefit if the MFA passes, so we can understand his enthusiasm for the controversial legislation. But in our opinion Campbell is more than merely enthusiastic. Continue Reading →