EcommerceBytes-NewsFlash, Number 3069 - May 21, 2013     2 of 2

Internet Sales Tax Unpopular with Online Sellers Surveyed

By Julia Wilkinson

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Eighty-three percent of Internet sellers surveyed by EcommerceBytes.com say the "Marketplace Fairness Act" won't affect them if it becomes law, because they do not meet the $1 million sales threshold currently in the bill. However, 80% said it would overburden Internet businesses in its implementation, and 81% did not think it would "level the playing field" for brick-and-mortar retailers, as supporters of the bill claim.

The Senate passed the MFA bill earlier this month that would permit states to require out-of-state retailers to collect sales taxes on purchases that their residents make.

Not surprisingly, 73% said they would not like the tax as a buyer of online goods, and 21% didn't care either way. About 39% said the tax would have a negative impact on their business, and 56% said it would not have any impact on their business, largely because they grossed under $1 million in sales.

However, one of the most frequently made comments in the write-in portions of the survey was that online sellers believed the $1 million threshold would eventually be lowered and would affect more and more of them over time. "Right now it would have no impact, because I'm way under the threshold, but I believe the threshold will gradually be lowered," wrote one respondent. "I will not be looking to grow my business, so it effectively kills my incentive," they added.

Several felt that the tax should be simplified, as in one flat rate for all out-of-state Internet sales, and should be managed by one single overall US tax office. "If there is one flat tax for the state, then it will be less of a burden," said one seller. But they also pointed out that in some states, different counties are taxed differently: "In Florida, all the counties have additional taxes that need to be paid. It will be a convoluted mess. The states will need to remove county taxes and the rest to make it easy on the merchant to pay the tax."

The concept of a "level playing field" was debated in the comments, with some people thinking it would not make the landscape "fair" because bricks-and-mortar retailers did not have to charge buyers shipping, the way online sellers do. Others pointed out that bricks-and-mortar stores should theoretically be charging all their customers - including visiting customers from out-of-state - whatever those customers' home state's sales tax was.

Still others said that many B&M retailers had a presence online anyway, and if they didn't, it was essentially their fault.

A few folks pointed out that they believed it would be a "double whammy" tax for wholesalers and drop-shippers, and others thought that international sales should not be included in the tax.

What do you think? Post a comment on the AuctionBytes Blog.


About the author:

Julia Wilkinson is the author of "The eBay Price Guide" (No Starch Press, 2006) and "eBay Top 100 Simplified Tips & Tricks" (Wiley, 2004-6). Her free "Yard Salers" newsletter is at available at YardSalers.net where you will also find her latest ebook, Flip It Again.


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