State sales tax laws are proving to be a burden to small sellers, according to testimony provided to members of a Congressional subcommittee.
On March 3rd, the Committee on Small Business Subcommittee on Economic Growth, Tax, and Capital Access held a hearing titled, “South Dakota v. Wayfair, Inc.: Online Sales Taxes and their Impact on Main Street.” The hearing focused on the impact to small firms as a result of the decision in the 2018 landmark Supreme Court ruling.
Paul Rafelson, tax attorney at Francissen Rafelson Schick, LLP, attended the hearing and said the business owners did a great job of shining a light on the tax issues Congress needs to address.
Rafelson, who is also volunteer Executive Director of the Online Merchants Guild (OMG), submitted written testimony to the committee. He described OMG as a trade association for small ecommerce sellers with a mission to advocate on behalf of members and provide them with a voice.
In his testimony, he accused some states of targeting small businesses and engaging in “goon-like” tactics:
“Some of our members have also submitted written testimony for the record, detailing their struggles in trying to comply with unreasonable state tax laws, as well as their recent experiences in dealing with states such as California, Washington and Massachusetts, all of which systematically targeted these small business owners, falsely accusing them of sales tax evasion, and illegally and unconstitutionally seeking to recover back taxes from them.
“For our members and those non-members who decided to speak and submit their testimony, I commend their bravery. But please know, that for every small business owner who submitted testimony, there are thousands who were too afraid. Too afraid to tell the United States Congress about how top officers of state tax agencies engage in goon-like tactics to shake down small out-of-state business owners for taxes that their own state laws said these businesses do not owe, nor would they owe due to longstanding constitutional precedent.”
Rafelson told EcommerceBytes he believes the committee members definitely see the problem, but said he believes there is a hold up in the house. “For a sales tax bill to go through, we would need the House Judiciary Committee to support it.” He advised sellers in New York to write to the House Judiciary Committee Chair Nadler and other members of Congress to pressure the Judiciary Committee to back sales tax legislation.
“Meanwhile, we are also in the midst of possibly getting a Senate Judiciary Committee hearing on the matter, which is hopeful,” he said. “Sellers should reach out to their Senators and let them know that this is important to them.”
Appearing before the subcommittee at the March 3rd hearing were the following four witnesses:
- Jamie Yesnowitz (Grant Thornton, LLP) testifying on behalf of the American Institute of Certified Public Accountants
- Mrs. Linda Lester, Vice President of K-Log, Inc.
- Kevin Mahoney, President and Founder of FindTape.com
- Brad Scott, Financial Director of Halstead Bead, Inc.
The House Small Business Committee streamed the hearing, available on YouTube.