E-fairness will help, not hurt, small businesses

A bedrock principle in the free market economy that has helped America grow into the most prosperous nation in the world is the idea that the government should not be picking the winners and the losers in the marketplace.

Sadly, over the last 25-plus years that principle continues to erode as the local American retail industry, which supports millions of jobs in every community across the country, is subjected to conflicting tax compliance standards due to a loophole that must be closed. Instead of businesses competing fairly on price, inventory and customer service, online stores are given as much as a 10 percent government subsidy over local stores which must collect state sales tax.

{mosads}Needless to say, online store operators that currently benefit from this sweetheart deal from the government are loathe to the notion of giving it up, and have worked hard to mislead lawmakers and the public into allowing them to keep it. Sadly, we saw that again last week when the owners of “Touch of Class,” an Indiana-base online home furnishings business – published an op-ed in The Hill on November 16th that grossly misrepresents e-fairness as a “hidden tax on small businesses.”

First, let’s get one thing straight: Sales taxes are not taxes on businesses. Rather, sales taxes are taxes on the consumers (who voted for the tax); businesses simply collect sales tax from consumers and forward those tax dollars to the state.

Second, they claim that mandating online businesses to collect sales taxes for a variety of states comes with “great complexity” and would cost them hundreds of thousands of dollars in new expenses. Now, I don’t know if these business owners are simply repeating what others have falsely told them, or if they are purposefully misrepresenting the issue, but as a local business owner that also sells online, and one who already collects sales tax in 26 states using free sales tax compliance software (technically a service), nothing could be further from the truth. In fact, the states’ efforts to modernize online sales tax collection, combined with new modern technologies, are already making it much easier to run my small business.

My wife and I own a growing sheep farm in upstate New York. We sell our livestock and wool products both online and at festivals and fairs in many states. Figuring out sales tax compliance obligations and filling out all the sales tax returns used to be complicated, exhausting, and expensive. That was until a little over three years ago when I discovered and started using a certified sales tax automation service that now handles sales tax calculations, reporting, and remittances for me, and it costs me nothing.

It’s been a life-saver: no more trying to figure out if wool is in the same tax category in different states, no more filling out the wrong form, no needless hours spent looking up all the different sales tax rates and trying to figure out which one applies to which product. Everything automatically updates online and it’s simple to use. While I am not a technology or sales tax expert, I quickly and easily (it took twenty minutes) signed up for and immediately began enjoying the efficiencies of automated sales tax compliance, and States’ simplified sales tax policies. I have even switched to and used multiple online store platforms with the same embedded sales tax automation features.

Having used this service firsthand for several years now, I can attest to the simplicity and the efficiencies it brings to our operation, which is one of the reasons I am supporting efforts in Congress to finally pass e-fairness. Contrary to what the owners of “Touch of Class” and other e-fairness opponents claim, all versions of the proposed law include significant protections for small online businesses, including relief from audit liability, free and easy-to-implement tax software, and even significant exceptions from the bill’s requirements for small businesses – though I expect owners of any size business will be as enthusiastic as my wife and I are that such sales tax automation services are easily accessible, and are already pre-integrated into many of the most popular online sales platforms.

The reality is that these and other provisions of e-fairness ensure that businesses like mine are shielded from state regulatory overreach while providing the certainty that all businesses can compete on a level playing field with the same set of rules.

And, as I noted earlier, I believe the other reality is that those who oppose e-fairness aren’t objecting to it because they truly believe it will be overly burdensome, but rather for the simple reason that they currently enjoy a massive tax advantage over their competitors and they do not want to lose it.

Finally, there is another important benefit for all businesses in the proposed e-fairness legislation – it requires states seeking remote sales tax collection authority to modernize and simplify their sales tax policies to make compliance easier. With all the talk of tax reform and elimination of tax loopholes in Washington DC, I am surprised this issue remains unaddressed. To my knowledge, Congress has considered this issue for more than a decade and has held almost 40 hearings on the matter. E-fairness overwhelmingly passed the Senate two years ago because it not only has broad, bipartisan support from lawmakers, but e-fairness also enjoys support from thousands of small business owners like me who just want sales tax compliance to be easier for everyone. It will finally restore long overdue fairness to the marketplace and I hope the House of Representatives will follow the Senate’s lead and pass it this year.

With Small Business Saturday this past weekend, I hope everyone who reads this came out to shop locally. And now take a moment to write to your members of Congress to ask why they continue favoring out-of-state businesses over local businesses by not passing e-fairness.

I strongly support and urge Congress to immediately pass E-Fairness legislation.

Wilson, of Stanfordville, N. Y., is owner of Point of View Farm, studied Economics at Fairfield University, has served locally as an elected official, and continues to advocate for greater efficiencies for all retailers.