Wednesday, April 24, 2013

The Marketplace Fairness Act 2013 - We Can & Should Do Better!

JAVA & Co. is a small business - owned and operated by a husband and wife team.  The Marketplace Fairness Act before congress, if passed, would create quite the accounting and sales tax research burden for online small businesses.  And the truth is, if businesses' costs go up, then eventually the prices go up.  The consumer pays more and nobody wins.  At the same time, we completely understand the notion of leveling the playing field.  At the end of the day, online sales tax for all transactions is inevitable.  As a small business, we propose the following simple, fair and just proposal:
PROPOSAL:  "Each online store collects the sales tax percentage for the online store's physical location for ALL online transactions." Period.

RECAP: This WOULD even the playing field for brick and mortar and online stores.  Brick and mortar store customers may vacation from outlying states, but the customers pay the appropriate local sales tax of their purchases.  No one is exempt.  Online should be treated the same way.  If you are in Texas and make a purchase online from an Illinois online store, Texans pay the applicable Illinois sales tax rate.  If you are a Texan and physically visit Illinois, you pay the applicable Illinois sales tax rate.  Fair.  Simple.  The idea / reality that 'tourists' are helping to increase state revenues through sales tax.  These 'tourists' just happen to be purchasing online vs. purchasing in person at a gift shop in Chicago (for example).


Simple Accounting: Sales tax is collected by online businesses for their local jurisdiction and reported like any other sales transaction - local or out of state - the online business only pays their sales tax rate due on all transactions.  (No need to figure and research every state, county and local sales tax for the 50 states - Let's be honest, THAT would be a nightmare).

State Tax Revenue:  Sales tax revenue collected by online businesses within the states would increase due to sales tax now collected on purchases from those customers residing out of state.

States:  State governments would be encouraged (due to the financial tax potential) to create a thriving business environment to foster online and small business.  Everyone wins!

Business:  Simplified accounting equals less financial burden.  Every customer pays the businesses' local sales tax.  

State Residents:  No longer have to 'track' online purchases and pay their state USE TAX each year.  Their online purchases would already reflect and include the sales tax from the state from which they are purchasing.  PLUS, state residents will benefit from the additional tax revenues generated for their OWN state through their local online businesses now collecting revenue from out of state purchasers. 

WHY can't online stores be treated like brick and mortar stores.  Brick and mortar stores are right.  Online stores should collect and pay their fair share.  It's the definition of fair in the current Act before congress that needs adjusting.  A brick and mortar store isn't required to ask each visiting customer where they are from and charge and collect sales tax according to their customer's home state.  That would be cumbersome.  Online stores should be held to the same standard, but no more than that.  You buy from our businesses in Illinois.  You pay Illinois sales tax.  Fair.  Just.  Simple accounting.

And there you go... my two cents...

Jamie Knoll
Concerned Small Business Owner - Illinois USA

JAVA & Co.
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