The Senate has passed the “Marketplace Fairness Act” in a nod to traditional brick and mortar businesses who feel they are at a disadvantage with online retailers who are only compelled to collect sales taxes on purchases made by customers residing in a state where the retailer has a “physical presence.” The bill passed overwhelmingly with bi-partisan support. It is seen as a way to “level the playing field” between brick and mortar stores and online retailers and to help state and local governments collect billions in lost revenue because consumers are not reporting the tax they owe on purchases when filing their tax returns.
Word in the media is that it won’t be so easy to pass the House. I have contacted my Congresswoman to let her know how this bill will affect me as a small business person.
The one consolation for some small businesses like mine…and it’s a big one, is that businesses with less than $1 million in sales will be exempt.
Big online retailers like Amazon.com and Overstock.com are on board with this bill. It makes sense for them since they are already charging sales tax in many states where they have distribution centers. But ebay is leading the way to advocate for an exemption of businesses with less than $10 million in sales and less than 50 employees. This would take the burden off a lot of small business that would like to grow and hire employees.
As the bill stands now, small businesses like mine will be at a great advantage. We will be able to keep our prices low while avoiding the tedious and expensive job of collecting and disbursing sales tax to the 45 states that have them. As long as our sales are kept under $1 million, we will have a competitive edge. It is regretful that it may affect my willingness to grow Highwater Filters to the size I envisioned when my company began to prosper. I had high hopes for millions in future annual sales and a growing workforce from my small local community. I had scores of ideas on how to contribute a portion of our profits to worthy causes both locally and globally. Now I might have to adjust my vision and settle for a profitable small business run out of my home. I’ll still be able to support my community and projects I believe in, but it will be on a much smaller scale.
This bill is an enormous disincentive for companies like mine to grow and create jobs.
Although I understand the loss in revenue that state and local governments experience from the growing internet retail trade, putting too much burden on small online retailers could put many businesses under. We already incur the expense of shipping orders to our customers. Adding sales tax could reduce sales enough to put many of us out of business. That would be a sad outcome to this well-intentioned bill.
If you believe this bill will be bad for small businesses and consumers, please call your member of the House and let your voice be heard. The future of online purchases is at stake.
Thank you.
