The Marketplace Fairness Act could significantly impact small online businesses if Congress does not reevaluate the bill's current small business exemption, according to a new VentureBeat article written by Matt Winn of Volusion - one of the largest online shopping cart providers for small businesses. The piece highlights three reasons why members of Congress should revisit the bill's "small business exemption:"

1. "The $1 million figure is arbitrary" - Winn points out the lack of precedent for the $1 million remote sales exemption currently found in the Marketplace Fairness Act. Previous versions of the Internet sales tax bill contained a higher threshold of $5 million. In addition, the current exemption does not reflect other federal small business definitions, including small business lending standards used by the Small Business Administration.
2. "The $1 million figure puts a burden on small online retailers, impacting economic growth" - Many businesses that exceed the $1 million threshold could end up spending $80,000 to $290,000 in initial setup and integration costs, according to a TruSt study, Will cites. These costs could force some businesses to shed employees or close up entirely.
3. "The $1 million figure hurts the competitiveness of small businesses against mega-retailers" - The Marketplace Fairness Act creates new barriers to entry for small businesses and reduces the incentive for them to reach new customers across state borders due to fears of audits from out-of-state tax enforcement agencies. For small businesses that do not have a physical presence in most states or large accounting departments like big-box retailers, it would mean a competitive disadvantage.
4. "While the small seller exception has good intentions in protecting the smallest of businesses from taking on the cost of implementing the online sales tax, it still places a big weight on the backs of small to medium-sized retailers," Winn writes.

For more information on why Congress should increase the Marketplace Fairness Act's Small Business Exemption, read the eBay Main Street's position on Internet Sales Tax.