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Family-Run Retailer: Internet Sales Tax Would Put Me Out of Business

Posted By Rachel Taylor On August 9, 2013 @ 1:30 pm In Economics | Comments Disabled

Newscom [1]


Rick Smith’s 14-year-old, family-run gourmet kitchen utensil business has a lot to lose if the Internet sales tax becomes law. And he’s not alone. [2]

While a proposal to tax Internet sales is seemingly stalled in Congress at the moment, a number of online retailers remain fearful of the ill-conceived Marketplace Fairness Act.

Small businesses across the country would be negatively affected by the Internet sales tax, which would require them to collect sales tax from out-of-state online customers [3]. Complying with close to 10,000 tax codes—and being at risk for audits from 46 states, the District of Columbia, and other U.S. territories— would put a heavy burden on these entrepreneurs.

“Even under the best of circumstances, audits are stressful, invasive, time consuming and costly,” Smith wrote [4] in Wednesday’s Wall Street Journal. “[T]he hard expense of extra accounting assistance and, more important, the demands on my time are a real challenge and take away from my ability to grow my business.”

A few advocates of the bill argue the Internet sales tax would encourage economic growth, but this analysis is based merely on wishful thinking [5] rather than facts. Smith worries that the big-name business supporters would overshadow the large number of businesses that would be severely hurt, even with a small-business exemption.

“The small-business exemption excluding companies with remote sales of less than $1 million sounds generous,” Smith said, but it leaves many small enterprises subject to burdens. “The definition of ‘small’ also will be a disincentive against growth.”

Smith writes that a business’s physical location should continue to be the basis of a state’s authority to impose taxes. He supports the current rule that no state should be able to force retailers to collect sales taxes from buyers unless the retailer has a physical presence in the taxing state.

“Any attempt by other states to pass their tax-collection burden on to me is a grave threat to my business,” Smith said. “The MFA is flawed legislation that doesn’t bring true simplification to the process.”

Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2013/08/09/family-run-retailer-internet-sales-tax-would-put-me-out-of-business/

URLs in this post:

[1] Image: http://blog.heritage.org/wp-content/uploads/laptop-internet-keyboard.jpg

[2] And he’s not alone.: http://blog.heritage.org/2013/06/04/internet-sales-tax-will-kill-my-small-business/

[3] collect sales tax from out-of-state online customers: http://blog.heritage.org/2013/06/21/internet-sales-tax-online-entrepreneur-would-downsize/

[4] wrote: http://online.wsj.com/article/SB10001424127887324328904578621612217620052.html#articleTabs%3Darticle

[5] this analysis is based merely on wishful thinking: http://blog.heritage.org/2013/07/18/internet-sales-tax-wishful-thinking-cant-make-it-pro-growth/

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