Small Business Owners: Internet Sales Tax ‘Devastating,’ ‘Would Put Us Out of Business’

By Craig Millward | May 18, 2018 | 12:37 PM EDT

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(CNSNews.com)- At a small business expo hosted by eBay in Washington D.C. on May 16, several small business owners told CNSNews.com that they opposed the idea of an Internet sales tax, calling the idea “devastating” and saying it would “put us out of business.”

In April, the Supreme Court heard oral arguments in South Dakota v. Wayfair.

 This case dealt with a South Dakota law, passed in 2016, which would require online companies that do more than $100,000 of business in the state, or more than 200 transactions annually, to collect a sales tax, even if they do not have a physical presence in the state.

“It’s just not fair for the heavy burdens that it places on small businesses like us to have to reach out to 9,600 different jurisdictions to file tax,” Michael Swoape, the owner of One4Silver told CNSNews.com. “It would really be devastating.”

“I’m hoping the Supreme Court gets it right,” he said, “but, if not, I’m confident that our legislators they’ll pull through for us in the end.”

Norb Novocin, owner of Estate Auctions Inc., told CNSNews.com, “And we would be liable for audits in all of those places, liable for doing the paperwork for all of these places. It would put us out of business. We can’t afford to do that.”

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“And if I were to have to go out and collect and remit sales tax to 9,600 different tax jurisdictions -- I’ve heard as high as 12,000 -- it could potentially sink my business,” Mac Griffiths, owner of MDG Sales, told CNSNews.com. “I have little time to sit and work out kinks in order to send envelopes to all these different places.”

The Supreme Court ruled in 1967 that states could not force mail-order catalog companies to collect sales taxes unless the company had a physical presence in the state. They reaffirmed that ruling in Quill Corp. v. North Dakota  in 1992.

Even if the Supreme Court strikes down South Dakota’s law, a ruling that is expected by the end of June, these small business owners say Congress needs to take action.

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“Well I’m optimistic,” said Griffiths. “Some of the things that have been said, I’m hopeful. At the same time, I think whether it’s decided or not, Congress is going to have to make some movement here to make a decision.”

“I think if we end up with a patchwork of different laws from every state, it’s going to be very harmful as well for a small business,” he said.

A proposed bill in Congress, the Marketplace Fairness Act, sponsored by Sen. Mike Enzi (R-Wyo.), would set a minimum threshold for online companies to collect sales tax at $1 million in total sales. Several small business owners told CNSNews.com that they would like the threshold increase to at least $10 million in total sales.

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Another issue small business owners told CNSNews.com they were concerned about is the de minimis value, or the value below which goods can be shipped into the country before duties and taxes are assessed.

“Anything under $800 into the United States is not taxed,” said Griffiths. “Yet, if we ship to Canada, anything over $16 is taxed. And so this huge disparity -- we’re here to say, listen, they’re talking about NAFTA right now, if they can put some pressure on Canada and say if we can make this a bit more level of a playing field when it comes to our cross border trade, I think it opens the floodgates to small businesses within our country.”

“There is a huge difference there," Spencer Apland, owner of 541 Motorsports, told CNSNews.com. “And so I’m competing with Canadian sellers that don't have to worry about this and my customers are getting charged more simply because of where I’m located.”

“I’m really hoping that we can get those to a fair level across the board,” Swoape said. “So that threshold, being so low, places a heavy burden on American small business and ultimately makes us non-competitive.”

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As a part of eBay's 13th Annual U.S. of eBay Advocacy Day event, small business owners met with members of Congress on Capitol Hill earlier on Wednesday. After meeting with members of Congress, many of these small business owners told CNSNews.com, they were optimistic.

“I am optimistic about the congressmen and the legislature,” Angie Nelson, owner of eWaste Direct, told CNSNews.com. “They’re receptive, they’re open to listening to us as to why the things that have been proposed do not work for us as small businesses.”

“I felt that they really listened to our voice and they definitely took into consideration a lot of the things that we have suggested and some of the issues that we bought to them today,” Ciara Brown, owner of The Diamond Hanger said.

(CNSNews.com)

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