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When it comes to Internet taxes, where you sit determines where you stand

There’s a wise adage that goes “Where you sit determines where you stand.”   Keep that in mind when you hear someone advocate a new sales tax collection mandate on small out-of-state retailers.


In a post at BNET last week, Chris Dannen described how big retailers are supporting the so-called “streamlined sales tax”:


“Brick-and-mortar retailers — many of whom have operations online — are some of the most vocal proponents of the new online tax laws. The members of the pro-tax lobby, which includes Best Buy, WalMart ,Target and others, already collect sales tax online, regardless of the buyer’s state, and see Web-only retailers as having an unfair advantage. How to Tax E-Commerce without Killing Entrepreneurship (and eBay)”


Big-box stores like Walmart and Target support a federal mandate that forces everyone to collect sales tax, even for states where they have zero presence.  So why would these giant chains  — who already have to collect taxes on their web sales — stand for this?


Because from where Walmart sits, any simplification – even a little – helps reduce their costs.  And because these big boys want to impose new tax collection costs on their small online competitors.


In his comment on the BNET post, David Campbell tells us where his company stands on these new tax collection burdens:

Our company,, is launching a completely FREE service named TaxCloud, which automatically calculates accurate local sales tax for every jurisdiction in the United States. Internet merchants can point their existing e-commerce systems at TaxCloud for sales tax calculation, the same way they point at USPS/FedEx/UPS for calculation of shipping rates. For those states which have come into compliance with the Streamlined Sales Tax Agreement, TaxCloud will also automatically remit collected sales taxes, file periodic sales tax returns, and will act as the primary responder in the event of a jurisdictional audit. – again all for FREE.


Now, think about where FedTax sits and you’ll understand why they are also standing for this new tax law.  FedTax stands to gain millions in new revenue Congress forces small businesses to seek help  — from services like FedTax.


But don’t think for a minute that a small retailer is going to find relief from the lookup and remit functions that FedTax would provide.   The real cost for small sellers starts when they have to integrate FedTax tools into their home-grown and customized online shopping carts. And after they swallow that cost, small sellers will spend loads of time and accounting fees handling exceptions, exchanges, and state tax audits.


Meanwhile, FedTax collects their fees from state tax collectors, just for giving a band-aid to small sellers suffering from mortal wounds to their cost structure.


WalMart and Target are happy, too, while they watch small online competitors follow main street retailers into the dustbin of American business history.


If you think about this from where small businesses sit, there’s just no way Congress should stand for a new tax scheme like this.

Steve DelBianco