Could online sales tax legislation actually lighten the burden on small businesses? A few retailers are making that claim.
When New York sheep farmer Sten Wilson began attending trade shows in Massachusetts and neighboring states, he found himself subject to paperwork and filing rules of multiple sales tax systems.
“The amount of paperwork — we generated $68 worth of sales tax for the state of Massachusetts,” Wilson told The Daily Caller News Foundation. “It took us literally hours of paperwork for us to file and remit that $68.”
“Then a few months later, they sent us a notice in the mail saying ‘you’re being assessed fees and penalties because you filed your paperwork incorrectly,’ after we had spent hours on the phone with their tax department making sure that we had filed it correctly.”
When Wilson searched the Internet and found Tax Cloud, an online tax system that automates the entire filing process, he thought he had found the answer and immediately started sharing his findings with other small business owners.
“I was truly amazed,” Wilson said of his discovery.
Since the Supreme Court handed down its Quill v. North Dakota decision twenty years ago, online retailers have not been required to collect sales taxes in states where they lack a physical presence. Congress has been debating legislation to change that by subjecting all online purchases to state sales taxes.
Leading the charge is the online retailer Amazon, which had previously opposed uniform sales tax laws. Amazon and other proponents argue that technology now exists to make an online sales tax feasible for smaller retailers.
Opponents see it as a matter of “no taxation without representation,” denying that states have the right to impose a tax-collection burden on a business that doesn’t operate within its borders.
“The Quill ruling exists for a reason: to protect businesses from regulation and taxation by states where they have no voice or vote,” Steve DelBianco, president of NetChoice, a group opposing online sales tax legislation, told The Daily Caller News Foundation.
“Congress should not sweep aside the Quill standard unless and until the states are held to true simplification and robust protection for small businesses,” he added.
Proponents emphasize that this is not a new tax — just a new way to collect taxes. Wilson argued that other taxes will rise if sales tax revenue continues to go uncollected while residents demand roads, schools and other public services.
“Everyone thinks they are saving money by not paying tax on their plasma screen tv but they are paying ten-fold on their property tax bill because now it’s mandatory,” Wilson explained. “One way or the other, the schools, roads, infrastructure, state medicare, everything has to be covered.”
“I see the impact of this, and I don’t think people are really looking at the whole picture. What’s getting reported is that you are going to pay more tax on your Internet purchases, well, you are already supposed to pay that tax.”
Wilson adds, “Everyone says that this is going to cost small business money, but what it actually does is it saves businesses money … because it completely automates the sales tax process.”
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