My experience as a small business owner has been exactly the opposite. State efforts at online sales tax collection have made it much, much easier to run my small business.
My wife and I own a small sheep farm in upstate New York offering for sale our livestock and wool products both online and at festivals and fairs in many states. Figuring out sales tax and filling out all the sales tax returns was, as you might expect, complicated and exhausting.
Just over two years ago I started using an automated sales tax service that handles sales tax calculation, collection, and remittance. It’s been a life-saver: no more trying to figure out if wool is in the same tax category in different states, no more filling out the wrong form, no needless hours spent looking up all the different sales tax rates and trying to figure out which one applies to which product.
I’ve since learned that automated sales tax services work with states and the Streamlined Sales and Use Tax Agreement (SSUTA), which states can voluntarily adopt to streamline sales tax processing for retailers. SSUTA states test and certify these sales tax management services making sure they function properly. I believe that even a small retailer using great software might have a hard time collecting sales tax for every tax jurisdiction in the country without the simplification measures set forth in SSUTA.
All of which leads me to the reason why I’m supporting the Marketplace Fairness Act and the Marketplace Equity Act, two bills that would grant states the right to require online sellers to collect sales tax, and hold them harmless for any errors that may occur.
The proposed legislation provides an incentive for states to simplify their sales tax laws, so that tax categories and definitions are standardized from state to state and there’s just one standard simplified electronic return for all states. These simplification measures make a huge difference for me, as I believe they would for all small business owners.
How do the two bills motivate states to simplify their sales tax laws? By making it a requirement of online sales tax collection. The bills maintain states can require out-of-state retailers to collect sales tax, but only if they make it simple for retailers to do so.
The bills don’t require states to adopt SSUTA’s guidelines, but they do require them to adopt SSUTA’s goal of making it simple for retailers to collect sales tax, and it requires them to accomplish some of the same goals as SSUTA (for instance, standardizing tax category definitions, so wool is in the same tax category in every state).
The combination of today’s freely available technology and states’ simplification efforts is a great benefit for small businesses like mine. It eliminates bureaucracy, promotes efficiency, and increases productivity and profitability. It makes dealing with sales tax much, much easier for small business owners.
Passage of S.1832 the Marketplace Fairness Act and H.R. 3179 the Marketplace Equity Act will prompt all states to simplify their sales tax laws. Therefore, I support these two bills.
To be clear, they do not create a new tax or raise taxes. They simply make collecting sales tax much easier for the millions of small business owners just like me. Consumers also benefit because they no longer have to self-track and remit the sales tax due on their individual state tax returns.
Congress, I urge you–enact the Marketplace Fairness Act and the Marketplace Equity Act.
Sten R. Wilson is a small business owner. He runs Point of View Farm, which is located in the Mid Hudson Valley of New York.