Online Sellers Unite to Oppose Ecommerce Tax Proposals

Calling sales-tax proposals 'unfair and unwise,' We R Here group seeks to put human face on proposed sales-tax requirements, telling lawmakers that small businesses, jobs are at risk.

By Kenneth Corbin
Thu, September 13, 2012

CIO

Online Sellers Unite to Oppose Ecommerce Tax Proposals

With the support of eBay, a group of small online sellers on Wednesday formally launched a coalition to lobby against federal proposals to require ecommerce merchants to collect sales taxes.

The We R Here group, the latest entrant in the long-running and contentious debate over online sales tax, formed about a month ago but staged its official coming-out party this week in the form of an online presentation featuring several Web-based sellers who offered sympathetic stories about their businesses and the detrimental impact that a new requirement to collect taxes in the more than 9,000 jurisdictions across the country would have.

"If I should have to start handling all these different tax jurisdictions, I would have no choice [but] to hire someone to do that for me," says Brandi Tolley, an Army veteran with a special-needs child who runs the online clothing store Buy Big from Brandi based in Springfield, Ill.

[Related: Internet Sales Tax Bill Gains Traction, Consideration]

With nearly 1,000 members, the coalition is calling on members of Congress to oppose bills that have been offered in the House and Senate that would empower states to require out-of-state ecommerce vendors to remit sales taxes on purchases their residents made.

Online purchases are currently subject to taxes in states with sales-tax laws, but the U.S. Supreme Court has held that only retailers with a physical presence in a state are required to collect the tax. The court affirmed that Congress could change that through legislation, but that absent action at the federal level, states could not impose the collection requirement.

That ruling, which predated the advent of Internet commerce, left it to individual consumers to report and remit the tax levied on purchases from outside the state when the retailer didn't collect the tax at the time of purchase. But most consumers either don't know about that requirement, known as use tax, or ignore it, and state tax administrators have complained about mounting revenue shortfalls.

The We R Here coalition is seeking to put a human face on the issue, arguing that requiring small online sellers to keep track of the tangle of state and local tax codes across the country would be an overwhelming burden, and put many out of business.

[Related: Online Sales Tax Effort Gains Momentum]

The group is headed by Phil Bond, who previously served as president of Tech America and as under secretary for technology at the Department of Commerce.

"We don't believe it is the job of small businesses to collect sale taxes for governments where they don't live, where they don't have a business presence, where they don't receive government services," Bond says, calling the sales-tax proposals "unfair and unwise."

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