Members "fly-in" to Talk about Taxes
by willow-wear
eBay Member

willow-wear is an eBay seller who recently joined other eBay members and staff on a trip to Washington, DC to discuss the proposed State Simplification Tax Project (SSTP). Below is a summary of willow-wear's impressions of her trip and her opinions about the bill, in general.

Q: How/when did you get involved with eBay, and what did you do before?

A: I am an attorney and now stay at home with my three small children. I started buying on eBay in 2000 when it was hard for me to get out of the house. When I looked at the volume of some of the sellers on eBay, I realized that I could make a part-time or full-time living from home through eBay.

I have been selling clothing, accessories and home items for about a year and half. I love running my own business. I'm able to dip in and out of eBay all day long and still take care of my children. No stressful deadlines, meetings, or driving downtown every day!

Q: Can you explain the SSTP legislation being proposed and how it might impact eBay members?

A: The issue here is the power of a state to collect sales tax from sellers located outside the state. The Supreme Court ruled in Quill v. North Dakota in 1992 that a state may not require an out-of-state seller to collect sales tax when selling into the state unless the seller has a "nexus"--a physical presence--in that state. The Court correctly determined that "remote" sales tax collection is an undue burden on interstate commerce.

What Quill means for me, for instance, is that, as a Texas resident, I am only required to collect sales tax for my eBay sales to Texas residents--even though I sell to almost all of the states. I do not have a nexus to Illinois by selling a handbag or two a year to Illinois residents. I am a "remote" seller to Illinois.

The legislative attempt to repeal Quill has come about because the states are strapped for funds (and because of the efforts of some eBay competitors). A number of the states have signed on to the so-called "State Simplification Tax Project" (SSTP) to attempt to make the collection of sales tax uniform among the 7000+ sales tax jurisdictions in the U.S. These states argue that this Agreement will remove the burden on interstate commerce and therefore Congress should repeal Quill and allow collection of remote sales taxes.

The proponents of SSTP argue that it is "simple" and "fair." Well, we all know there is nothing "simple" about taxes, especially when dealing with thousands of taxing jurisdictions, each with different rates, categories of taxable and non-taxable goods, and sales tax holidays!

There is talk that the SSTP will be fair if it requires only one sales tax rate per state. However, even with only one rate per state, it will be very burdensome for eBay sellers to comply. If you think about your own eBay business, you quickly realize how difficult it would be for you to remit sales tax in all the states. You would have to familiarize yourself with the law of each state, determine the tax rate and which goods are taxable, collect the tax from buyers, sort all your sales by state, fill out paperwork, remit the tax, perhaps on a quarterly basis--what a nightmare!

Nor would the SSTP be "fair," just because it requires all sellers to collect sales tax. The legislation will decrease sales on eBay and drive buying behavior back to the brick-and-mortar stores and the huge online sellers, which is exactly why some of those companies are pushing for this legislation. They would love to get rid of the eBay competition.

Each kind of seller to consider here has distinct selling advantages and disadvantages. First, the eBay seller has the advantage of the efficiency of the eBay platform and a worldwide market of potential buyers. Second, at the brick-and-mortar store, you can touch and see goods in person. And, third, the huge online retailer has the established name and processes to assure Internet buyers. Requiring remote sale taxes from small eBay sellers outside the state does not in any way "equalize" the playing field.

Q: What prompted the trip to Washington, DC...did you go alone or with a group?

A: I got to know the eBay public policy team at eBay Live this past June. They're a lot of fun! One of them is a friend from high school; I didn't even know she worked for eBay until I saw her at the convention.

The policy group thought of me when they organized a D.C. "fly-in" to begin to educate legislators on the tax issue. Three other eBay sellers came who are successful, long-time sellers on eBay; I was happy to represent the relatively small and newer seller and all the stay-at-home moms, the elderly, and the disabled for whom eBay provides extra income and independence.

Q: With whom did you get to speak? Did you find them attentive?

A: Each seller at the fly-in went with one person from eBay to meet with legislators and staff from the seller's home state. In one day, I went to ten different legislative offices to meet with Texas Congressman Pete Sessions, U.S. Senator John Cornyn, and others.

I found them very receptive to learning about eBay and how empowering it is to hundreds of thousands of Americans. Most of them did not know how many of their constituents use eBay and how it provides a platform for so many small and big businesses that employ people in their state.

Q: What was your main message, and what type of reaction did you receive?

A: My bottom line message was that if this legislation passes, I and many other eBay sellers would be out of business immediately.

My sales will go down because I'm not offering a bargain to my buyers. And, I can't possibly handle the administrative burden of collecting and remitting sales tax in close to fifty states. So, there will go my small but important contribution to the economy of Texas--what I spend in Texas to buy my inventory and support my business, and the people I hope to employ here some day.

In fact, one of the sellers at the fly-in calculated what it would mean to his state if this legislation passes. He has warehouses, employs forty people, and pays payroll taxes and benefits and more. He determined it would be a net loss in revenue to his state. The SSTP will not be the big source of revenue that the states think it would!

The legislators responded well to our message that this legislation would be a tremendous step backward for millions of people--both buyers and sellers--that eBay has empowered. They really want to understand how the remote sales tax legislation may hurt their constituents and their state revenues.

Q: What can others do who would like to get involved?

A: I hope that buyers and sellers on eBay will start to tell their representatives that SSTP is not "simple" or "fair." SSTP needs to be stopped at the state level by showing legislators how much it will hurt eBay businesses in their states, as well as eBay buyers who rely on eBay for a truly accessible, efficient marketplace. We must mobilize the power of the eBay community to counteract this big threat to our way of business and way of life.