Oct. 1, 2014 SIGN IN | REGISTER

Small Businesses Balk at Online Sales Tax That Could See Lame-Duck Action

The We R Here Coalition backs a position taken by eBay Inc., which operates an online marketplace for mainly small retailers, that lawmakers should allow the Small Business Administration to define small sellers. The agency defines small electronic retailers as those with up to $30 million in annual sales.

Proponents of the legislation, including giant online retailer Amazon Inc., say that figure is so high that it would render the bill meaningless. Amazon has put its weight behind the Senate’s $500,000 threshold, saying any higher of a number would give too many smaller online retailers an advantage over big players such as itself.

Rep. Jackie Speier, D-Calif., said the House bill’s $1 million threshold strikes the right balance between helping small businesses and addressing the issue of online taxes.

“The government should not be in the business of picking retail winners and losers by providing up to a 10 percent price advantage to some online retailers for the very same product,” Speier said in a statement. “The internet marketplace is no longer in its infancy.”

Dealing With Myriad Jurisdictions

The We R Here Coalition contends that the legislation poses an additional burden for Internet retailers that offline stores don’t face, since e-retailers would have to collect based on where the customer is based and thus comply with tax laws in thousands of jurisdictions.

“You pay taxes where you have operations. It’s not fair to pay taxes where you pay no taxes and get no services,” Bond said.

The coalition has support from several technology-friendly lawmakers who are concerned that the legislation could dampen the Internet economy.

In the House, Democrat Zoe Lofgren and Republican Dan Lungren, both of California, have authored a resolution (H Res 95) to oppose new tax requirements on Internet companies. Sens. Kelly Ayotte, R-N.H., and Ron Wyden, D-Ore., both of whose states have no sales tax, introduced a companion resolution (S Res 309) and have said it would be unfair for businesses in their states to have to collect tax on behalf of others. Lofgren and Wyden sit on the House Judiciary and Senate Finance committees, respectively, where the bills are awaiting markup.

The emergence of a coalition of small businesses could bring more lawmakers over to their side, eBay lobbyist Brian Bieron said in an interview.

“The more members of Congress realize that small businesses in their state and in their districts are using the Internet to stay competitive, I think they are not going to want to harm those folks with a tax-law change,” he said.

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