Letter to the Editor: A day in D.C. to protect small, online businesses

Dear Editor,

Small businesses are no longer just storefronts on Main Street.

Many of today’s small businesses use the Internet to operate both in local communities and globally. I am thankful the Internet has enabled me to grow my business by reaching customers all over the world.

As the owner of a small business that pays local taxes and employs local residents, I think it is important my voice is heard just as loudly as large retailers in the debate over an Internet sales tax. That’s why I traveled to Washington, D.C., last month to show Missouri lawmakers how small businesses like mine would be burdened by the Internet sales tax bill before Congress.

To showcase how detrimental this bill – formally, and ironically, known as the Marketplace Fairness Act – would be, I met with U.S. Sen. Claire McCaskill, Rep. Jason Smith and Sen. Roy Blunt’s policy adviser to outline four key concerns.

1. Taxation without representation. Unlike big-box retailers that have stores and warehouses across the country, small Internet-enabled retailers are usually only located in one state. I have always collected sales taxes from my customers in Missouri, and I am happy to do so because this is where I live, work and vote. Collecting a flat rate based on where you operate your business is sensible. However, the bill would force me to collect sales tax from customers in 9,646 tax jurisdictions where I have no physical presence, political representation or access to public goods and services.

2. Skewed definition of small business. The U.S. Small Business Administration currently defines a small business as any business with less than $30 million in annual sales. Yet, the bill would only exempt small businesses with less than $1 million in annual out-of-state sales. I am deeply puzzled by the large disparity between the SBA’s definition and the one presented by supporters of the bill. In order to promote growth, Internet sales tax legislation must include a more robust exemption. My business falls above the current threshold, but I am far from what should be considered a big business. The small profit margin I earn is used to expand my inventory and invest into the growth of my business.

3. Unfair compliance burdens. Small online businesses simply do not have the capacity to abide by this law and remain profitable. With only nine full-time employees, running my business, responding to customer inquiries, integrating the necessary software for the law, responding to audits and remitting sales taxes to thousands of jurisdictions would be nearly impossible. The “big guys,” such as Wal-Mart and Best Buy, already are equipped to handle a national sales tax collection because they have geographic footprints and employees in all 50 states. Complying with this law would dominate my time and hamper my ability to compete with large retailers.

4. Technical difficulties. Proponents of the bill claim that because it would require states to provide free tax software, it would be easy for online retailers to comply. But it’s not that simple. Software can’t respond to a tax audit or automatically enter information into a collection database. Furthermore, the legislation only requires that every state offer the necessary software for its own state; there is no requirement that all the states’ software is compatible.

I am thankful that McCaskill and Smith not only took the time to meet with me, but also were receptive to my argument. Small online businesses deserve greater equity, and I am hopeful that my meetings will help persuade our lawmakers to closely analyze how the bill would harm small-business owners who rely on the Internet to sustain and grow their businesses.

—Ken Bengson, owner, Countryside Pet Supply in West Plains[[In-content Ad]]