Happening in Congress
Supporters of internet-enabled small businesses everywhere rejoiced when the Marketplace Fairness Act (MFA) failed to pass in the House of Representatives last year. Unfortunately, policymakers began the new year by looking at potential Internet sales tax alternatives and reintroduced the MFA in March. Although the MFA does not appear to be headed towards becoming law in 2015, another bad Internet sales tax bill has arrived on the scene – the Remote Transactions Parity Act (RTPA).
Introduced in June by Congressman Jason Chaffetz (R-UT/3), the RTPA is very similar to the MFA. If passed it will impose extremely burdensome remote sales tax remittance and collection requirements on Internet-enabled small businesses, as well as expose those same businesses to state tax auditors from across the country. But the RTPA goes one step further than the MFA in terms of potential harm to small businesses. Like the MFA, the RTPA has a very small exemption for sellers with gross sales under $1MM. However, any business that uses an electronic marketplace (like eBay) is automatically disqualified from this already tiny exemption. In other words, the RTPA is in many ways actually worse for internet-enabled small businesses than the MFA.
Click here to tell Congress not to pass the Remote Transactions Parity Act
Of course, that’s good news to money-hungry states and anticompetitive brick and mortar retailers, and both groups have lobbied Congress aggressively to adopt the RTPA. At a recent retailer event, for example, Congressman Chaffetz was quoted as saying: “Don’t let [your members of Congress] off the hook. If they're supportive, they will cosponsor the bill. If they don't cosponsor the bill, they’re not friendly to the bill.” He also encouraged the group to commit to bringing the issue up repeatedly, including at town hall meetings. If a sufficient number of Representatives are swayed by these my-way-or-the-highway tactics and cosponsor the bill, it is likely that it will be put up for a vote and passed. That is why it is critical for you to continue to remind your Member of Congress of the harmful effects of the RTPA and the MFA!
eBay continues to support House Judiciary Chairman Bob Goodlatte (R-VA/6) and his very well thought out seven basic principles related to the collection of Internet sales taxes. The Chairman’s principles are an attempt to resolve the fundamental problems with the MFA – and now the RTPA. As Chairman Goodlatte himself recently said, Congress should “not allow a state to reach out and regulate a business outside of its jurisdiction.”
Happening in the States
While efforts to pass Internet sales tax legislation at the federal level remain stalled, states have been ramping up their own efforts to try to impose taxes on Internet sales. While numerous bills on this topic were introduced this year in state legislatures around the country, there were two particular state challenges where YOU, our Main Street Members, made a real difference:
New York
The New York State budget included a section that would shift regulatory and sales tax compliance burdens to online marketplaces, increasing costs to users and undermining the very business model that allows platforms to provide low-cost services and opportunities to New Yorkers. The unintended consequences of this legislation would have been significant. It would have created barriers to new jobs and in-state investments, penalized marketplaces that chose to remain in New York, and likely encouraged a patchwork of state statutes causing unwieldy and cumbersome audit and compliance burdens for marketplaces and the small businesses that operate on eBay and other platforms. Thanks to your advocacy, this section was dropped from the final budget!
Washington State
This year, Washington State introduced the most expansive Internet sales tax proposal seen at the state-level to date. A staggering total of five Internet sales tax policies were advanced by the WA Department of Revenue and strongly supported by House leadership as a means of producing revenue to help the state balance their budget. Passed as a package, these policies would have impacted the eBay community by imposing tax collection requirements that would have ensnared most eBay sellers who sell into Washington State. We are pleased to report that these harmful IST proposals were rejected in the final Washington State budget which was finalized in early July. This was due, in part, to the Washington State Main Street members that participated in our state-specific grassroots campaign and generated letters of concern to their WA State legislators. As always, your voice makes a real difference in these debates.
As always, eBay wants innovative small businesses to have room to grow and not be burdened by additional tax and compliance requirements when they operate online. As such we will continue to monitor the Internet sales tax conversation at both the federal and state level and continue to look out for the interests of our community of buyers and sellers. Learn more about eBay’s position on Internet sales tax.