June 3, 2013, 3:09 PM

How would an online sales tax impact online retailers?

How would an online sales tax impact online retailers?

Internet Retailer

An online sales tax is gaining momentum after years of languishing in Congress. The U.S. Senate last month passed the sales tax legislation, which sponsors dubbed The Marketplace Fairness Act. The bill faces stronger opposition in the House of Representatives, but President Barack Obama supports it and is likely to sign it if it emerges from the House. The law would force many merchants to change how they operate because as many as 388 Top 500 retailers don't now collect sales tax in all of the 45 states and federal districts that have a sales tax. Moreover, a recent survey by online postage vendor Endicia finds 44% of consumers say they will buy fewer products online if they have to pay tax. Does that keep online retailers up at night?

How do you think an online sales tax will impact online retailers?

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"The Marketplace Fairness Act changes things. That's for sure. But we're a cutting-edge company and have the latest software tools. Fortunately, the way we are set up on the UniteU Technologies e-commerce platform, we could do the calculations of local taxes—state, county and city—for buyers across the United States in a matter of minutes. We already do this in various states." Robb McCarter, director of e-commerce, Edwin Watts Golf Shops LLC

"The effect of a sales tax depends on what you're selling and your number of SKUs. We have many categories, including food, clothing and equine products, so we'll have to organize all our data into what's taxable and what's not taxable in each state. We could spend $40,000 to $50,000 in the first year between software and labor." Joshua Wood, co-founder, Ozbo.com

"A new sales tax law would harm small online retailers' ability to compete and grow. EBay will continue to focus on bringing greater balance to the legislation by protecting small businesses with less than $10 million in sales or fewer than 50 employees." [Editor's note: The Senate bill exempts retailers with less than $1 million of online sales outside of their home states.] Brian Bieron, senior director of global public policy, eBay Inc.

"It's an issue that any executive needs to address. But given the legislative process, it is an issue that will take time to resolve." Billy May, vice president, e-commerce, digital and customer marketing, Abercrombie & Fitch Co.

"Sales tax will mostly impact anyone that competes with commoditized products. Our paintings are not commodities. We've tested higher prices, higher than what a sales tax would be, and did not see a unit sales drop." David Sasson, CEO, Overstock Art LLC


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