Today, eBay Government Relations released a new document to educate policymakers on why an Internet sales tax bill would be very bad for small business. It’s proven that small businesses of ALL models grow our economy. Efforts to force online small businesses to collect sales tax from thousands of taxing jurisdictions, thus subjecting them to unjust audits and enforcement requirements, would deter economic growth. Innovative businesses should not be subject to these burdens and fears just because they choose 21st century business models.
In the House of Representatives, there are two proposals under development. Earlier this year, Chairman of the House Oversight Committee Jason Chaffetz (R-UT) introduced H.R.2775, the Remote Transactions Parity Act (RTPA), as an alternative to the Marketplace Fairness Act (MFA) – a bill that was jammed through the Senate in 2013 but which stalled in the House of Representatives. The RTPA bill incorporates all of the compliance burdens present in the MFA, but is actually much worse for small ecommerce businesses. The most glaring flaw in RTPA is an online marketplace discrimination clause. Any seller, regardless of the size of their business, who uses an online marketplace platform will be forced to collect and remit tax to every jurisdiction to which they sell products. Additionally, the small business exemption threshold disappears after three years. This offers no protections and dramatically inhibits growth opportunities. Alternatively, Chairman of the House Judiciary Committee Bob Goodlatte (R-VA) has developed a set of principles that seeks to promote tax fairness for all businesses, regardless of size or model. His proposal, which has not yet been introduced as legislation, would implement a “hybrid-origin” model whereby sellers would be treated more like their brick and mortar counterparts.
The path forward for online sales tax legislation is uncertain, especially considering recent developments within House leadership. The best thing you, as an eBay Main Street member, can do is to continue to engage with your elected officials to let them know that any bill that punishes online small businesses with excessive tax burdens is bad economic policy. We will be using this new document to increase understanding of the issue amongst policy makers and continue to advocate for sensible tax policy for small eCommerce businesses across the U.S. Be on the look-out for more information and other ways you can get involved as this issue develops over the next few months.