We are Main Street, too; a group of small businesses that have come together to oppose the Marketplace Fairness Act, any future burdensome online sales tax initiatives, and other threats to online retailers. True Main Street physical retailers and true Main Street Internet retailers are not at odds. We are, in fact, allies. We both struggle to compete with big retailers that sell products below cost, engage in price wars, get sweetheart tax breaks, and use leverage, lobbyists, and political expenditures to get special favors from government that small businesses do not get. Even proponents of the legislation admit that it would affect up to 3.5 MILLION small businesses.
Supporters of the dubiously titled Marketplace Fairness Act include Walmart, Best Buy, Home Depot and other mega-retailers that already capture 83% of all online commerce. And their market share online is increasing. They don’t need any more favors or unfair advantages.
- Small online retailers will pay between $20,000 and $300,000 in compliance costs in the first year alone. It will cripple all of us and some will be put out of business.
- The law’s complexity will overwhelm us, subjecting us to rules in more than 10,000 tax venues.
- The bill drastically increases our audit risk and exposes us to audits from remote states where we have no physical presence, no political representation, and no right to vote. We can be held personally liable and driven to personal bankruptcy for mistakes.
- Our businesses already experience significant disadvantages in the marketplace compared to physical sellers. Disadvantages including threats from software patent trolls, rising shipping costs, and reverse-showrooming. Our disadvantages will be exacerbated, putting some of us out of business.
We believe the Marketplace Fairness Act is fundamentally flawed and cannot be fixed though amendments.
Representative Goodlatte’s Seven Guidelines For Remote Sales Taxes
House Judiciary Chairman Bob Goodlatte has released seven principles that establish the requirements to which any Remote Seller Tax Collection Bill must adhere. The Marketplace Fairness Act (MFA) is incompatible with all seven principles, rendering the MFA non-viable in the House of Representatives. 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.
A business which establishes physical presence in a tax jurisdiction enjoys many benefits by physically locating there. When a business avails itself of those advantages, it assumes additional responsibilities on behalf of the jurisdiction. This is a level playing field under which all Brick & Mortar, Exclusively Online, and Brick & Click businesses operate. Each business chooses whether the benefits of establishing physical presence outweigh the costs of doing so.
We affirm that the current standard for sales tax collection is appropriate and fair and we are pleased that the American people are overwhelming opposed to legislation that violates Goodlatte’s principles.
- Must not expose remote retailers to any additional costs not incurred by physical retailers and must not give Big Box retailers like Walmart and Amazon.com an unfair advantage.
- Must clearly define one taxing rate.
- Must exempt remote sellers from any out-of-state audits (No regulation/taxation without representation).
- Must ensure that remote sellers only deal with one database of clearly defined product categories. (eg: a scarf cannot be tax exempt apparel in some states and a taxable accessory in others; a granola bar can’t be tax-exempt food in some states and taxable candy in others; A button cannot be tax-exempt in some states but not in others.)
- Must ensure that remote sellers only deal with taxing authority in states where they have physical presence.
- Must ensure that remote sellers only file one tax return per month to one taxing authority.
- Must ensure that the law is simple enough that any business of any size can comply with the requirements without undue burden.
The current physical presence standard in the United States meets all of Representative Goodlatte’s guidelines as well as the eMainStreet guidelines.