Marketplace Fairness Act

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Tuesday, 04 March 2014

What is the Marketplace Fairness Act (S.336 / S.743 / H.R.684)

It is a tax on all internet sales.  The current law states that you must collect sales tax in states that you have offices or conduct business.  For example, 3Gstore is in Illinois.  Monthly we spend hours filing Illinois Sales Tax.  We are a small company.  If we are forced to collect sales tax for all states and all tax jurisdictions and file it monthly, it will be a tremendous burden on our business.  For many small online resellers, this act could be fatal.  We get it, the states are in trouble and they are looking for more revenue - but why is it my job to do this for every state.  There are over 9000 tax jurisdictions, we have enough trouble dealing with one.  This would be a huge burden.

A few years we were audited by the Illinois Department of Revenue.  This audit took 12 months.  We had to go back from 2005 - 2010 and give them records for everything.  After weeks of work, do you know what the conclusion was?  We purchased supplies (Blank CDs, Paper, Shipping supplies and misc other items) that we should have paid sales tax on.  This is called a "Use Tax".  The Illinois Department of Revenue was looking at all of our sales for 5 years and when they failed to find any issues they found that we purchased supplies and didn't pay sales tax.  This was a huge waste of our time and I am sure for Illinois tax payers as well.  It scares me if we have a relationship with 9000 other tax jurisdictions who all want more money.

Walmart and Amazon and other large retailers are also pushing this legislation because they have departments of people who pay taxes and this move will help squeeze out smaller competitions who cannot afford these excessive burdens.  We are a small business, we don't have the resources to be a tax collector (and filer and handling audits, etc.) for every tax agency in the US.

The current act states that online businesses with less than one million in gross sales are exempt.  The definition of a small business is sales of seven million or less, why not change this bill to be at least seven million in sales (some are saying 25 million or less should be exempt).

For more info, see We R Here (Web Enabled Retailers Helping Expand Retail Employment)

Thank you.

Michael Ginsberg

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