Sales Tax Fundamentals
Get up to speed on the basics of sales tax
Mr. Smith Goes to Washington… to Protest Internet Sales Tax
byApril 29, 2014
We’ve often written on this blog about how the Marketplace Fairness Act and other proposed internet sales tax measures are unfair to online sellers. That’s why we were thrilled to learn that one online seller is taking the fight to Washington D.C.
Jason T. Smith knows about online selling. One half of the famous Thrifting with the Boys eCommerce duo and co-star of “Thrift Hunters” on Spike TV, Smith has built an empire with his partner Bryan Goodman. As an expert on eCommerce and helping new sellers navigate the successes and pitfalls of this endeavor, he’s seen firsthand how perils like complying with overly-onerous sales tax laws can slow a seller down.
Today, Jason is headed to Washington D.C. to participate in the Small Business Fly-In/Advocacy Day of the US of eBay. There, he’ll talk to the “powers that be” about the confusion he and thousands of other sellers go through every day as they try to figure out sales tax from selling online.
And it’s one of the biggest headaches online sellers have right now. Smith tells stories of fellow eCommerce warriors coming up to him with inspirational stories of making their own way only to now face brick walls where open doors should be. The online sales tax laws will make many small businesses vanish from the web. Here at TaxJar, we’ve always maintained that creating barriers for small businesses – which is what the internet sales tax does – only hurts the economy.
Interestingly enough, one of the other common myths about the online sales tax is that it will drive sales back to brick & mortar stores is being debunked. Recently, researchers have pointed out that online shoppers are actually flocking to other online shops where they still enjoy tax free sales. This confirms something we’ve suspected all along. Namely, online shoppers want to shop online. Rather than go out to their local towns and shops, they just click to another site.
Between 2012 and 2013, researchers tracked sales in states that had laws on the books about Internet sales taxes. During this time they only noticed a 2% increase in sales to local shops. On the other hand, smaller online retailers saw a 61% increase in sales when there was a “big ticket item” over $300, meaning online shoppers simply sought out a solution that benefited them.
Any eCommerce seller could’ve told lawmakers that online shoppers are great at finding the easiest, cheapest route!
But that’s why we have people like Jason Smith out there fighting the good fight against these ridiculous laws. A few years ago he went to talk to senators and congressmen and received a tepid response. Many just weren’t interested in hearing what he had to say and others said they would never change their minds.
However, that could all change this year. With the outcry from sellers, buyers, and everyone else, plus the data coming in that disproves what states said would happen, the conversation could be very different.
You can help by contacting senators and congressmen in your state and let them know you support Jason Smith and everyone else heading to the Advocacy Day event. Maybe in the future they’ll start to listen and work towards a real solution for sales taxes for online businesses.