September 14, 2012, 10:30 AM

Small e-retailers mobilize to lobby against online sales tax collection

The eBay-backed “We R Here” coalition gives a new voice to small web-only merchants.

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Contending that forcing small web-only retailers to collect sales tax “is unfair, unwise and will undermine innovation,” the newly formed We R Here coalition formally launched this week as a Washington, D.C.-based lobbying group for small merchants opposed to laws requiring them to collect sales tax.

The group’s formation comes at a time when there are multiple bills in Congress designed to overturn existing federal law that says states can only mandate sales tax collection by businesses with an in-state physical presence, such as stores or distribution centers. Those bills are supported by large retail chains and Amazon.com Inc., who contend that all types of retailers should have to collect sales tax to create a “level playing field” among merchants. States—there are 45 plus the District of Columbia that have a state sales tax—also support the legislation as a way to recover what the University of Tennessee estimates will be a shortfall of $23 billion this year in tax revenue because of tax uncollected on web and catalog sales.

The We R Here coalition, whose supporters include eBay Inc., has compiled a membership of nearly 1,000 retailers since forming a month ago, Phil Bond, the group’s executive director, said in a webcast Wednesday announcing the coalition. “We want to make policy makers know we are here,” Bond said, and “make sure they are aware of the critical role small web-enabled retailers play in today’s modern economy.”

He added: “It is not the job of small businesses to collect taxes for state and local governments where they don’t live, don’t have a business presence, and don’t receive government services.” Bond is a former undersecretary for technology at the U.S. Department of Commerce and a former president of TechAmerica, an advocacy group for technology industries.

Brian Bieron, eBay’s senior director of federal government affairs, says eBay, which operates an online marketplace for thousands of small web merchants, is backing the coalition to support small retailers “because we believe that small business retailers from cities and towns across the country, who are using the Internet to grow their business, should tell their story so that people know who they are and how they are contributing growth, jobs and innovation to the economy. Small web enabled retailers are hard-working entrepreneurs and everyone should want their voice to be heard.”

We R Here, which is an acronym that stands for “Web Enabled Retailers Helping Expand Retail Employment,” contends that requiring small online retailers to collect sales tax would “crush the growth and job-creation potential of small online retailers.” The group and eBay contend that any new federal legislation requiring sales tax collection by web merchants should set a threshold of annual sales under which merchants would be exempt from tax collection responsibility.

Steve DelBianco, executive director of NetChoice, a more established advocacy group for retailers opposed to sales tax collection—whose members include eBay and larger web merchants like IAC InteractiveCorp, the parent of Shoebuy.com—says We R Here will add an important voice to the sales tax debate. “We really need to hear more from all those businesses who rely on the Internet to grow their sales and create jobs,” he says. “We R Here will provide that voice, so I welcome them to the fray.”

NetChoice has called for exempting retailers with under $5 million per year in remote sales. Current legislation in Congress call for exemptions of either $1 million or $500,000, though Amazon has suggested $150,000.

Amazon for years opposed online sales tax collection, but has changed its position recently as it built out distribution centers in more states and agreed to collect online sales tax more broadly. For example, Amazon will begin collecting sales tax tomorrow in California and started collecting tax Sept. 1 in Pennsylvania. Amazon already collected tax from online shoppers in Kansas, Kentucky, North Dakota, New York, Texas and Washington, and increasingly is seeing its interests aligned with retail chains that collect tax in the states where they operate physical stores.

We R Here’s web site is located at WeRHereCoalition.org.

Amazon is No. 1 and Shoebuy is No. 90 in the Internet Retailer Top 500.

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