Online sales tax effort gains momentum

By Kenneth Corbin, CIO |  IT Management, ecommerce

Only one witness at Tuesday's hearing, Steve DelBianco, the executive director of NetChoice, a coalition of businesses and trade groups opposing online sales-tax requirements, claimed that the bill under consideration would amount to a new tax.

"It is absolutely a new tax," said DelBianco, arguing that to shift the onus of collection from the states, where it currently resides, to businesses would amount to a significant new burden, posing the greatest harm to smaller sellers. DelBianco argued that redesignating use-tax obligations as sales taxes would indeed constitute a new tax.

eBay, a member of NetChoice, has been one of the staunchest opponents of the various sales-tax proposals that have emerged in the U.S. Congress, pitting the auction pioneer against Amazon, which has been lobbying in favor of a national sales-tax framework over the numerous state-level measures that legislatures have advanced in an effort to address the tax shortfall.

Like other critics of federal sales-tax laws, eBay has argued that the complexity of the more than 9,600 state and local tax codes would pose a formidable administrative and compliance burden on the smaller sellers that populate its marketplace.

The various proposals on the table include steps to address those concerns, but opponents say they do not go far enough. For instance, the bill the Judiciary Committee considered on Tuesday would require states to streamline their tax systems under a single tax authority with one statewide sales and use-tax return for remote online sellers. It would also carve out an exemption for smaller vendors with less than $1 million in annual revenue.

In a statement, eBay called the exemption "extremely inadequate," a refrain echoed by other tech stakeholders.

"We are disappointed that the continued effort to increase the burdens on online retailers is once again rearing its ugly head," TechAmerica President and CEO Shawn Osborne said in a statement. "Unfortunately, an Internet sales tax, which is what this bill would [proposes], is a step backwards that would only hinder our economic recovery."

A similar bill to the Womack-Speier measure in the Senate includes a stingier small-seller exemption of $500,000 in annual revenue.

Supporters of new sales-tax collection requirements argue that such measures are necessary to correct a competitive disadvantage that brick-and-mortar retailers face or to address the significant budget shortfalls that states are facing by enforcing a law that is already on the books.

Originally published on CIO |  Click here to read the original story.
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