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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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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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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 →

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CPAs Oppose Marketplace Fairness Act

CPAs across the country are coming out in opposition to the Marketplace Fairness Act. These are the CPAs who represent small businesses and who understand tax laws and audits. If CPAs are strongly opposed to MFA, that should be enough to cause every member of Congress to pause.

The American Association of Attorney-Certified Public Accountants (AAA-CPAs) publicly opposes the Marketplace Fairness Act for a myriad of reasons. In a recent letter to Congress, they stated that the cost of compliance foisted on small businesses will be MORE than the tax revenue generated from the law. The AAA-CPAs state that the MFA will cripple small businesses and overburden the American economy. A few important quotes from their open letter

“Even though the members of the American Association of Attorney-CPAs (AAA-CPA) are some of the most likely professionals to thrive in a world with the increased state tax jurisdictional reach, our members strongly believe that the proposed Marketplace Fairness Act will overburden our national economy and the legislation’s goals could be better achieved by much less burdensome means.”

Continue Reading →

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Avalara and the Marketplace Fairness Act

Avalara is a venture-funded, leading provider of sales tax and compliance automation services.  A director for the company recently spoke at an event held by proponents of the Marketplace Fairness Act (MFA) and Fortune magazine recently featured them as a big “winner” if the MFA passes.  Yet, Avalara has publicly expressed  how burdensome and crushing sales tax compliance is for remote sellers.  This does not change if the MFA passes, hence the need for their software, or software like it, in order to help alleviate some of this enormous burden.  The quotes below (clearly marked with quotation marks and with a gray background) are from their publicly available white papers, with a large portion of the quotes found in their publicly published Sales Tax Survival Guide 2013.  Avalara aims to alleviate some of the burdens and risks foisted on small businesses via the Marketplace Fairness Act and they will be compensated handsomely for it.  But small businesses have repeatedly pointed out (hereherehere and in a  joint letter to congress and even in person to Congressional Reps) that software (even when subsidized by taxpayers) is not sufficient. Not even close.

In fact the American Association of Attorney Certified Public Accountants (AAA-CPAs) strongly opposes the Marketplace Fairness Act because software can’t protect small businesses from the costs and audits. In an open letter they say “Proponents of the proposed legislation would like you to believe that free or low cost software can so simplify the collection process for remote sellers that the time and effort to comply will be minimal. This misconception could not be farther from the truth.”

Now let’s look at Avalara’s quotes.

Note: Remote sales tax collection and remittance requirements introduce a crushing compliance burden on small businesses. 

“Considering the already impenetrable maze of sales tax collection rules, businesses face an uphill battle this year. Sales tax compliance in 2013 requires more resources and expertise than most small to midsized businesses possess.[i]

“Current state and federal proposals to change sales tax collection requirements on remote sellers such as online retailers add to an already difficult compliance environment for businesses.” [ii]

On average, sales tax compliance costs small and mid-sized businesses three to 15 cents per sales tax dollar collected. According to the U.S. Census Bureau, failure to account for that expense is one of the principal causes of small and mid-sized business failure in the United States. Why? The components of this compliance expense are difficult to pinpoint and often overlooked. The costs are hidden in staffing, compliance, accounting systems, information technology, and other business infrastructure.  In addition, sales tax compliance is a passthrough activity that adds no value to the bottom line. Sales tax collection requires you to act as an agent of each state in which you have nexus and collect and remit sales tax accurately. And if you don’t do it correctly, accurately and on time, your business can face heavy fines and penalties.[iii]

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Compliance is Literally Impossible for Our Small Businesses

“The word “Fairness Act” is just a marketing tool used by politicians that receive money from large companies. The large companies just want the small companies like mine to disappear…”
Thomas Carlson

Kimberly & Thomas Carlson

By Thomas Carlson , AssitedLivingStore.com

In 1999 I was employed as a Federal Agent.  I wanted to find a  way out of a career where I had supervisors and a job that controlled my life.  My wife had a Master’s Degree in Gerontology (the study of aging).  We saw the Internet as a new and exciting way to try to become entrepreneurs.  We created a company called Assisted Living Store, Inc., and started selling adaptive products that would assist the elderly and disabled to perform daily living activities easier.  It took us eight years until I was able to quit my federal job and pursue our Internet business full-time.  My wife had stayed at home during this time providing daycare services for others while raising our children.  We used the money from her daycare to fund the entire Internet business.  We had no financial backing and started our business from scratch.

In 2006 we moved the business out of our basement and purchased a warehouse in South Saint Paul, Minnesota.  We decided to expand our business and import our own line of products.  Most of the items we sell are exclusive to our company.  We are still a 2 person company today.  Our children do help out when needed.  We as a family handle all aspects of running the business.  We import our own items, do all of the accounting,  unload 20′ full containers of product, answer the telephone, do the web design, take all of the photos on our websites, pack and ship all products, manage the warehouse, and the list goes on and on…

The MFA will require us to make some decisions on the future growth of our company.

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Honest Video about Marketplace Fairness Act

Please watch and spread this video far and wide. It is very well made and and it’s also honest. Thank you to the We’re Here Coalition for creating.

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Floored by the Marketplace Fairness Act

Just Krauss

Just Krauss

By Justin Krauss, GarageFlooringLLC.com

Several years ago I overcame a series of difficult obstacles and started Garage Flooring LLC up in my garage. At the time, things were so tight financially that I personally filled out the paperwork and put the filing fee on a credit card. I thought getting started would be the hardest battle for a small business owner. Boy was I wrong!

The Marketplace Fairness Act threatens to destroy eCommerce as we know it. I am not talking about Big online mega-retailers. Those companies actually support this bill because it gives them an unfair advantage and will put small businesses out of business. I’m talking about small online businesses like mine. While proponents of this bill want you to believe all internet companies are run by rich CEOs in Silicone Valley, most of us are anything but. My wife and I have a blended family of 8, we live in a rented 2500 sq. ft home in a modest neighborhood in Grand Junction, CO. Between the two of us we have over 300,000 miles on vehicles that span over 20 years.
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Time to Stop Growing My Business

michelle chance-sangthong

Michelle Chance-Sangthong

By Michelle Chance-Sangthong, CS Ideas, Inc
I’ve been in online retail since 2001, so I’ve weathered wars, floods, and the Great Recession, not to mention the dreaded Google updates. No matter what the challenge, it never occurred to me to close my business.

The Marketplace Fairness Act has me rethinking that.

Do I really want to grow my business if that would mean incurring an additional $20,000 annually to collect and pay sales tax nationwide? I don’t think so.
Continue Reading →

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The Cost of Complying with the Marketplace Fairness Act

Kevin Hickey

Kevin Hickey

By Kevin Hickey, OnlineStores.com

We have looked extensively in-depth at the consequences of the Marketplace Fairness Act. Online Stores Inc., has determined that the costs to comply with the proposed bill are going to be exorbitant for small businesses like ours. OLS has sat down and deciphered just how much it is going to cost in the first two years of implementation.

Several different costs will be associated with the passing of the new bill. Among these costs include management time to review the obligations, create an execution plan and determine how to monitor, the purchase of the software, set up and maintenance fees, and fees per transaction, just to name a few! All of these costs begin to accrue and after just one year, OLS has estimated its costs to be over $300,000!
Continue Reading →