More than one million Americans signed a petition calling for Congress to pass federal legislation on Internet-wide state tax collection in light of the Supreme Court’s decision in South Dakota v. Wayfair. The Court’s June 2018 ruling left many questions unanswered with respect to the collection and remittance of sales tax for online small businesses. The need for common sense tax policy is especially critical for the 4.1 million small businesses that sell online and the more than 15 million people small retail businesses employ.
eBay was encouraged today by the introduction of federal legislation that addresses the uncertainty in the Supreme Court’s ruling. Led by Representatives Jim Sensenbrenner, Anna Eshoo, Karen Handel, Zoe Lofgren and Jeff Duncan, this bi-partisan solution aims to provide a clear and reasonable framework for collecting sales tax from remote small businesses that sell online. The “Online Sales Simplicity and Small Business Relief Act” specifically calls for:
- A ban on the retroactive collection and remittance of sales tax by remote sellers for any sale prior to June 21, 2018;
- A phased approach for states to impose sales tax collection duty on remote sellers for sales that occur after January 1, 2019; and
- A small business remote seller exemption, which applies to remote sellers with gross annual receipts of less than $10 million.
“It is imperative to have one national sales tax standard for American small businesses that rely on the Internet,” said Cathy Foster, Vice President of Government Relations at eBay. “This bi-partisan legislation represents a positive step forward by providing clear direction on Internet-wide state tax collection, which will protect small businesses and encourage continued entrepreneurship. More than one million eBay sellers signed a petition asking the U.S. Government to step in and provide greater clarity on sales tax. Now we’re asking Congress to pass this important piece of legislation, which we believe will help small businesses continue to compete and create jobs.”
Colleen Rast, founder of Great Sky Gifts, stated: “As a small online retailer based in Montana, a system in which small businesses have to compete with larger businesses by collecting and navigating the lax laws thousands of jurisdictions creates a huge burden. Giant online retailers have the resources and teams of lawyers and accountants to do that, but I don’t. It would create an unfair playing field for future smaller online retailers as well. Congress is tasked with handling issues of interstate commerce, and I am heartened by the legislation proposed today, which offers a reasonable solution for protecting small American businesses like mine from unreasonable tax burdens.”
“My company already collects and remits sales tax, like any other business does, in states where we have a physical presence,” said Chad White, owner of Class-Tech Cars. “I am grateful to Representatives Sensenbrenner, Eshoo, Handel, Lofgren and Duncan for proposing a legislative solution that protects small businesses like mine from being subject to tax requirements that make more sense for large retail companies and encourages more Americans to embrace entrepreneurship.”