Marketplace Fairness Act is Unfair to SMBs
The Marketplace Fairness Act, best known as the Internet Sales Tax would be too burdensome on the small business like mine. Most sales from small internet companies are just a few dollars in lots of different places.
To require sale tax recordkeeping, collection and distribution of sales tax in the thousands of sales and use taxing districts throughout the United States is far too burdensome for all small companies.
It takes hours to complete forms for California alone. How much time is it reasonable to ask the small businessman to spend on collecting taxes? How much business will be lost if there is no economic advantage to doing business with the small businessman?
Many of California’s cities, counties, towns, and communities have special taxing jurisdictions (districts), which impose a transactions (sales) and use tax. These districts increase the tax rate in a particular area by adding the district tax to the combined statewide rate of 7.50%. The rates for these districts range from 0.10% to 1.00% per district. More than one district tax may be in effect in a given location.
As a seller or a consumer, you may be required to report and pay district taxes for your taxable sales and purchases. Source: California Board of Equalization
How complex it it to pay sales tax? In California for example there are 6 pages of ‘special tax rates,’ that every penny of every sales has to be accounted for, collected and then individually accounted for when paying. Any mistakes will be penalized.
Have you ever paid sales tax to California? Every quarter they torture you with the complex long accountability form that takes these 5 pages of rates into account. But its not that easy because there are taxing districts and taxing zones. I don’t know how anyone can figure this stuff out.
Click on the form to the left to download the PDF of the
California District Taxes, Rates and Effective Dates…. Poetry
California isn’t the only state with multiple tax jurisdictions.
It is far less burdensome to place the burden of paying USE TAX rather than requiring companies to collect and pay SALES TAX.
If states want to collect tax, let them collect these taxes directly from it’s citizens. Use taxes are functionally equivalent to sales taxes.
There is no reason to make a federal case out of states sales tax. The feds should stay out. Let each individual state decide what is a fair… tax sales or use or neither. Then the citizens can decide where they want to live or who they want to vote for.
However if congress does decide to go through with the insane legislation, make it fair to the smallest of companies. ” ..if Congress passes online sales tax legislation, we believe small businesses with less than 50 employees or less than $10 million in annual out-of-state sales should be exempt from the burden of collecting sales taxes nationwide.” Ebay President John Donahoe