eBay announced that more than one million Americans signed a petition the company supported calling for Congress to pass federal legislation on Internet-wide state tax collection in light of the Supreme Court’s decision in South Dakota v. Wayfair.
The Court’s June 2018 ruling left many questions unanswered with respect to the collection and remittance of sales tax for online small businesses.
eBay is encouraged by the introduction of federal legislation that addresses the uncertainty in the Supreme Court’s ruling.
Led by Representatives Jim Sensenbrenner, Anna Eshoo, Karen Handel, Zoe Lofgren, and Jeff Duncan, this bipartisan solution aims to provide a clear and reasonable framework for collecting sales tax from remote small businesses that sell online.
The “Online Sales Simplicity and Small Business Relief Act” specifically calls for:
- A ban on the retroactive collection and remittance of sales tax by remote sellers for any sale prior to June 21, 2018
- A phased approach for states to impose sales tax collection duty on remote sellers for sales that occur after January 1, 2019
- A small business remote seller exemption, which applies to remote sellers with gross annual receipts of less than $10 million
It should be noted that the eBay supported petition did not ask for legislation as outlined above and in fact said: “We, the undersigned, call on the federal and state governments to take the following positions on new Internet taxes and support the millions of small businesses and consumers across the country.”
Therefore, it appears eBay is shifting its position a bit by endorsing the “Online Sales Simplicity and Small Business Relief Act” as it now appears to support a law that would force states to provide a streamlined and common sales tax collection method.
“It is imperative to have one national sales tax standard for American small businesses that rely on the Internet. This bipartisan legislation represents a positive step forward by providing clear direction on Internet-wide state tax collection, which will protect small businesses and encourage continued entrepreneurship.
More than one million eBay sellers signed a petition asking the U.S. Government to step in and provide greater clarity on sales tax. Now we’re asking Congress to pass this important piece of legislation, which we believe will help small businesses continue to compete and create jobs.”
Cathy Foster, Vice President of Government Relations at eBay
The announcement by eBay did not address so-called marketplace laws that are placing the burden of collecting of sales tax on marketplaces such as eBay, Etsy, Amazon, and others.
eBay just this week announced they will phase in the collection of sales taxes next year in three states that already have such laws and the company also appears to expect to see further state law changes that would shift the responsibility for sales tax collection on eBay, not the seller.
The apparent hidden agenda here, and probably the reason for their shift in position, is that eBay does not want to be in the sales tax collection business.
If the legislation passes, eBay may avoid the marketplace sales tax collection requirements as states might be forced to come up with a common method for small businesses to collect and remit sales tax.
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