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eCommerce Sales Tax

It looks like the U.S. Senate is going to pass an Internet Sales Tax bill this week.  It isn’t clear if there’s enough support in the House to pass it.  I can only hope not, and I strongly urge you to call your Representative and ask them to vote against it.

The Senate bill isn’t as bad as some of the proposals that had been floated.  It requires online retailers with more than $1 million in sales outside of their state to pay sales tax to every tax jurisdiction they make a sale in.  $1 million in sales isn’t very much, and will affect a lot of small retailers.  Some earlier proposals would have affected sellers with revenue over $500 thousand, which would have decimated the ranks of small sellers.

There are approximately 10,000 tax jurisdictions in the United States.  The cost of the tax itself isn’t a problem, but the cost to a small business of complying with 10,000 independent tax jurisdiction laws is.  Large retailers like Amazon will hire a few accountants and programmers and never notice the difference.  Small retailers will be crushed trying to comply with all of those laws.

I know the intent of this law is to enable state and local tax jurisdictions to collect sales taxes that they rely on, but the unintended consequence will be to give a huge advantage to the large, established online retailers, and make it that much harder for small retailers to grow and challenge them.  The same goal could be achieved by requiring online retailers to pay a flat percentage of online sales to the Federal Government, and have the proceeds distributed among states in proportion to their population.  That would give state and local governments the revenue they’re missing out on with a very low cost of compliance to small businesses.

A lot of families rely on the supplemental income they make from selling online to meet their basic expenses, whatever Internet sales tax law that’s passed should protect them.  The bill in the Senate will financially crush a lot of innocent people, though I realize that isn’t their intent.

Please contact your Congressmen about defeating this bill, and ask your friends and family to contact them as well.  Congress can do a better job, it isn’t hard, and it will protect a lot of small sellers and families.


I’ve updated my list of potentially good products for you to sell on Amazon for April, please download it if you haven’t had a chance to yet.


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