THREE BILLS INTRODUCED
Three separate bills were introduced in the last Congress that would authorize the states to require remote sellers to collect taxes. In the Senate, the Marketplace Fairness Act had bipartisan support but did not come to a vote. Sen. Dick Durbin, D-Ill., one of the bill's sponsors, has told The Associated Press the bill was tabled because of concerns by Sen. Max Baucus, D-Mont., about the burdens tax collection would place on companies in his state, where there is no sales tax.
But the burden small business owners fear may not be as bad as they think. The government would likely require that states make the process easier for small companies. And the smallest of these businesses are expected to be exempt. The proposed Marketplace Fairness Act exempts businesses that have $500,000 or less in sales from remote states. But Durbin says that number is open to negotiation.
"That's not set in stone," Durbin says. "I want to come up with a number that spares anyone from concern."
He also says that the tax computation software will have to be user friendly.
"This is the only way we can sell this," he says.
There's already some precedent — and a process —for making sales tax collection less burdensome. In 1999, the National Governor's Association and the National Conference of State Legislatures created the Streamlined Sales Tax Agreement to make taxes easier to collect. The Streamlined Sales Tax Governing Board, or SSTGB, was formed to carry out the agreement. To help reduce the hassle of tax collection, the SSTGB has contracted with software developers to come up with programs designed to compute the correct tax.
One such program, TaxCloud, is designed to keep track of changes in state and local tax laws and will file sales tax returns on behalf of sellers, according to David Campbell, CEO of The Federal Tax Authority, one of the SSTGB's developers.
NEVER THAT SIMPLE
Laura Zander, a retailer of yarn and sewing suppliers, is skeptical. She also has a background in software development.
"It's really easy, free software, but it's never that simple," says Zander, owner of Jimmy Beans Wool in Reno, Nev. "You just can't program it as easily as they say you can."
Zander, who had $6.5 million in sales last year, believes that compliance with the law would be expensive.
"Think about the complications — on a monthly or quarterly basis, filing and tracking payments," she says. "That's an extra $50,000 or $75,000 a year in programming fees, bookkeeping, management. That's a lot."
The Electronic Retailing Association, a trade group that's fighting the legislation in Congress, also says that it will be expensive for sellers to comply.
"Even if you have software that's good, to integrate the coding on the (seller's) end of these elaborate sales systems is a pretty big thing — even for an Amazon," says Bill McClellan, vice president for government affairs for the ERA. "That will leave these little guys out in the lurch."
Other companies are taking the prospect of implementing new software and collecting the tax in stride.
"If it's imposed on us, it's something we have to deal with. It's not going to break us," says Henry Posner, a spokesman for B&H Photo a New York retailer of photo and electronic equipment that has a large online business. Posner declined to reveal the company's sales figures.
But Dean Davis, who sells trucks, back hoes and other big machinery, says that because he's not a typical Internet seller who could benefit from software programs, his company couldn't take advantage of the streamlined tax collection process. His Narrows, Va., business, Affordable Trucks & Equipment, advertises online but closes deals over the phone and via e-mail.
"Even if it's a streamlined procedure, it would still be extra work," he says. "You have to file a report, whether it's monthly, quarterly or annually."