On July 29, H.R. 1570 was introduced in response to the Main Street Fairness Act. This resolution, titled “Supporting the Preservation of Internet Entrepreneurs and Small Businesses” is an effort to prevent new taxes or tax changes for online businesses.
Representative Paul Hodes (D-New Hampshire) yesterday introduced H.R. 1570, coined Supporting the Preservation of Internet Entrepreneurs and Small Businesses. The resolution has been referred to the House Committee on Ways and Means for discussion.
This bill, co-sponsored by four other representatives, is a bipartisan response to the hotly contested HR 5660, The Main Street Fairness Act, which would require online business owners to pay sales tax to states included in the Streamlined Sales and Use Tax Agreement. For this to happen, states within this agreement would have to simplify their tax codes and provide a registration database for online merchants.
Support for this latest resolution is pouring in from staunch opponents of The Main Street Fairness Act. eBay’s Government Relations team released the following statement: “This resolution is just part of the widespread, bipartisan opposition against new burdensome and unfair tax regimes on small online businesses,” and applauds HR 1570’s “commitment to protecting the hundreds of thousands of small online retailers and entrepreneurs that have provided consumers access to greater choice and quality goods.”
The resolution itself states, “Congress should not impose any new burdensome or unfair tax collecting requirements on small online businesses, which would ultimately hurt the economy and consumers in the United States.”
The text also references the current economic climate by explicitly indicating higher unemployment figures and the closing of businesses. The resolution implies that a required online sales tax would hinder the economic recovery by adding another barrier to small businesses and entrepreneurs, who are commonly accepted as providing the foundation for growth.
Opponents of HR 5660 are likely to include major click and mortars, or businesses that have both online and retail stores. These players, like Wal-Mart and Target, are required to pay sales tax for online purchases due to their physical locations. Businesses that are solely online, however, aren’t regulated to pay sales taxes across states based on the precedent from a 1992 Supreme Court decision that indicates tax codes across states are too complex for business owners to reasonable collect taxes.
Ecommerce coalition, NetChoice, is an advocate for the new resolution. “Don’t believe it when tax collectors say their software makes it trivial for tiny sellers to collect everyone’s sales tax,” said Steve DelBianco, executive director. “Small sellers will spend thousands of dollars making changes to their website software, plus endless time and accounting fees to handle exceptions, customer questions, and state tax audits… We all support a simpler tax system, but the streamlined sales tax project has become the proverbial wolf in sheep’s clothing.”
Only time and politics will tell which resolution will pass.
What do you think about all this? Share your thoughts and opinions below.
-Matt Winn, Marketing Associate