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Abbie's Column : Laws and Regulations

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Net Sales Taxes Are Coming! Net Sales Taxes Are Coming!

By Abbie Drew
Mar 29, 2013

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I write today's title with the same warning that Paul Revere
had on his famous ride in 1775 to raise the alarm about the
coming British troops.

If small online businesses fail to fight it's inevitable that
online businesses will be required to collect state sales tax.

The US Senate has already approved "The Marketplace Fairness Act"
which will require online business to collect state sales tax.
Hopefully the US Congress will not allow the bill to pass.

Why is "The Marketplace Fairness Act" a problem?

Your online business will be required to collect tax on your
customer's purchase based upon your customer's location.
Once you collect the tax you'll have to pay that money to the
correct state and local municipality.

Currently, there are about 9600 variable state and local tax
codes, collection standards, and remittance schedules.

Can you imagine trying to comply with 9600 different tax
governance rules and pay out to 9600 different localities!


As a small online business, you want to spend your time building
your business, developing your products and making sales.

The Marketplace Fairness Act on the other hand will require you
to spend time complying with collecting 9600 different taxes.

Not surprisingly, Amazon supports the new sales tax. They already
have physical locations in many states requiring them to collect
sales tax. As a bigger business they also have the resources
to handle the burden of compliance.

For smaller online businesses handling compliance will be an
extra expense that might very well put you out of business!

While it's called a Marketplace Fairness Act, it actually puts
small online businesses at a disadvantage to Brick and Mortar
businesses. Small, local brick-and-mortar stores have the
rule to collect one sales tax based on the stores physical

A small online businesses, however, will have to collect taxes
based upon the buyers location (9600 possibilities at present)
and then pay to that distant authority. How is that easy and
simple! Not to mention 46 states could now audit you!
(A New York state tax collector would have the power to
audit any online business in all 50 states.)

The Marketplace Fairness Act will devastate online small
businesses. eBay and NetChoice (which includes Facebook,
Yahoo and AOL) oppose The Marketplace Fairness Act, and
I must side with them.

Where do you stand?

Take a quick DEMC poll:


Abbie Drew
DEMC Editor

Readers Comments:

That's the first time I had heard of this. Absurd! I have a
hard enough time keeping track of my own income and sales
tax let alone taxes for 9600 other locations multiplied by
the number of customers. That would certainly cause a lot
of online businesses to be non-compliant due to no fault of
their own. Just try to pay an accountant for that kind of
time and effort.


The government needs to cut their expenses and stop raising taxes!


Yes this will ruin the American dream of trying to get
better. Might as well the government create a big warehouse
and just employ the country so we all can work in this big
government run factory. Talk about loosing ambition and the
population becoming a welfare society because they can't excel.


If it went into effect, I would be forced to close my small
Internet business.


I only oppose it because it's just another example of
Congresses stupidity. Instead of cleaning up their own
house (budget) they look for ways to squeeze every penny
they can from the folks who can least afford it. I live in
Costa Rica, so regardless of what Washington decides they
can kiss my butt. I ain't paying them a cent. And if I need
to start placing warnings on all my offers "Not available
to those in the U.S.", so be it. It's been the opposite of
that for too long.


You can share your opinion in our DEMC poll:

The Marketplace Fairness Act Poll

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