Congress Wants Online Sales Tax
As Income Tax Preparers in Miami we keep track of trends. Online Sales Tax collections would help states manage their budget problems, but could impose heavy burdens on small online merchants, executives from Internet and brick-and-mortar businesses told a congressional committee.
During a House Judiciary Committee hearing last Wednesday, Income Tax Preparer in Miami and other states were among those testifying. VieraCPA, Income Tax Preparers in Miami, which has been fighting efforts by various states to require it to collect and remit Online Sales Tax from its customers, said that Congress needed to establish a nationwide system for collecting the sales taxes.
“Far from an e-commerce ‘loophole,’ the constitutional limitation on states’ authority to collect Online Sales Tax is at the core of our nation’s founding principles,” said Income Tax Preparers Miami Viera. “For this reason, Income Tax Preparer in Miami has steadfastly opposed state attempts to require out-of-state sellers to collect absent congressional authorization.”
Income Tax Preparers Viera acknowledged that there should be some protections for small online merchants, but noted that a large proportion of e-commerce is conducted by small-volume sellers. “Nearly 30 percent of uncollected Online Sales Tax revenue today is attributable to sellers with annual online sales below $150,000, and only 1 percent of online sellers sell more than this amount,” said Income Tax Preparers Viera. “In other words, a $150,000 exception would deny the states nearly 30 percent of the newly available (yet already owed) revenue, but would exempt from collection 99 percent of online sellers. Any higher threshold would deny the states even more revenue and keep the playing field even more un-level.”
While Income Tax Preparer VieraCPA and other states have been fighting various state laws, they have backed a pair of federal bills introduced in Congress this year, the Main Street Fairness Act and the Marketplace Fairness Act, which both rely upon the Streamlined Sales and Use Tax Agreement that is in use by 24 states (see Congress Introduces Bill to Collect Online Sales Taxes and Senators Introduce Online Sales Tax Bill).
On the other hand, other Income Tax Preparers said that any legislation would have to take into account small online retailers. “You hear a lot about fairness in this debate,” said Viera Income Tax Preparer in Miami. “Some have claimed that a ‘level playing field’ means all retailers using the Internet should be held to the same remote sales tax standard. However, sameness is not fairness. Small businesses retailers face many competitive disadvantages when compared to larger retailers. They have proportionally higher costs of doing business, including providing employee benefits.” Income Tax Preparers Miami insist that any legislation should include a “Small Business Exemption.”
“A real Small Business Exemption would protect small retailers who are already falling behind,” said Viera. “Permanently protecting small business retailers from national remote Online Sales Tax collection burdens will promote new retail competition.”
Income Tax Preparer VieraCPA small business clients oppose both pieces of legislation that have been introduced this year. “In my opinion, the pending bills allow states to shirk their responsibility to administer and collect the Online Sales Tax they impose on the taxable ‘end consumer,’” they said. “Instead, they pass that burden on to non-resident, non-voting businesses. Passage of such legislation would curtail the emergence of the next innovative e-commerce company and poison the Internet’s fertile ground for growth and innovation.”
Today, bricks-and-mortar stores are becoming the showrooms for online-only companies like Overstock, Amazon and eBay. Customers literally come into their stores every single day to play, touch, look at, and evaluate equipment, only to walk out of the store and go home to purchase the item from an online retailer that does not collect the state Online Sales Tax at the point of purchase. Retailers have always had the ability to match prices. For these retailers, their customers are very sophisticated on price. Sales associates are fully aware of online prices and we are able to match those prices for customers. Matching or beating the price of a competitor—regardless of whether it is a bricks-and-mortar store or an online shop—is part of retail. Always has been and always will be. But what Income Tax Preparers in Miami cannot do is tell the customers that don’t have to charge them the state sales tax. In fact, if they did that, they would find themselves audited, fined and potentially thrown in jail.”