Internet Marketers Need To Support The Main Street Fairness Act

On Friday July 29th, Senator Dick Durbin (D IL) introduced the “Main Street Fairness Act” which allows for a standardized method for states to collect sales tax for online retailers. I completely disagree with the majority of rhetoric surrounding this issue, including the dialog coming out of Durbin’s office, but I do support this legislation. Others in the internet marketing industry should to.

Here’s what the bill proposes in short:

  • No new taxes.
  • Applied only to taxes already imposed by the states that are not being collected.
  • Provide states with the clear authority to require retailers to collect sales taxes already owed.*
  • Treat all retailers equally regarding sales tax collection.
  • Release consumers, currently expected to calculate and send in the taxes themselves.
  • Exemption for small online retailers.

We need to look past the rhetoric in the dialog and focus on the bigger picture. For example framing this issue as leveling the playing field for offline retailers is ridiculous. Shipping and handling cost often times outweigh sales tax. So to assume that retailers are choosing e-commerce to avoid a sales tax is not grounded. Consumers are using e-commerce more and more for many different reasons. Some are shopping more online because the internet has mastered the “long tail” approach. Some are shopping online because online retailers can offer a completely customized shopping experience. Many are shopping online because they are just lazy.

But like I said we need to look past the rhetoric and move past this issue so that more business owners have the opportunity to succeed online. The only way we are going to do that is a federal solution that lays a ground work for how online retailers collect taxes across the country.

I also think that this legislation will put to rest the debate in the affiliate marketing space. With this type of legislation we wouldn’t see Amazon or other large affiliate programs pulling out of states to avoid sales tax.

Ebay is coming out against this bill citing that it would harm small online retailers. I am concerned with that as well. I would be interested in an amendment that take’s the concerns of small business into account.

*I am not a big fan of this provision. I mean that could be like a decade of taxes for some companies. I am willing to bet it was thrown in to appease a state supporter, but Durbin is willing to use it as a bargaining chip if he needs to.

If you thought this post was half way interesting, you might want to follow @joehall on Twitter. Hes a total nut bag over there, but worth a few laughs.

2 Comments

David Campbell on July 30, 2011 at 3:56 pm.

The Main Street Fairness Act (MSFA) will protect small businesses across the country from the varied state-by-state affiliate nexus efforts that are ineffective and are hurting small businesses. State could repeal their affiliate nexus laws once MSFA is passed – I am happy to see Congress finally move to address this issue.

Regarding the small business concerns raised by eBay, they know very well that the MSFA, and the Streamlined Sales and Use Tax Agreement already has three very attractive small business components:
1. Businesses selling less than $500,000 in remote sales annually would not be required to collect and comply (SSUTA Section 609).
2. To offset any costs related to changing or updating their accounting systems, businesses could earn up to $12,240 in sales tax credits.
3. To ensure businesses can comply easily, the states pay TaxCloud to handle all sales tax management aspects, including calculation, collection, reporting and remittance. In addition, TaxCloud handles initial registration, responds to any possible jurisdictional audits, and provides indemnification in the unlikely event of any errors. Best of all, TaxCloud is completely free for retailers – find out more at taxcloud.net.

Reply

Ravey on October 11, 2011 at 5:49 pm.

I agree with most of what you say, I do however, become concerned with so much government intervention to the web. Internet leveled the playing field for us “average joe’s,” and I become uneasy when I see government interfering in something that should be in essence of the people.
Legislation always starts out very innocent, but can easily turn “bad for small businesses” possibly in the future. Literally, the web opened up the avenue for “us smart folks who didn’t have the privilege of being privileged.”
I have noticed in other democracies (Brazil) how government can CUT into the growth of ONLINE business. These are my concerns based on experience; however I do see your point and agree.

Really wonderful article, I will stay on top of this legislation.
Ravey

Reply

Leave Your Comment

Your email will not be published or shared. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>