eMainStreet Alliance Stands Against MFA: Passed Bill May Result in Bankruptcy

In May of 2013, the Senate passed the Marketplace Fairness Act (MFA) coercing online businesses to collect and forward sales tax to inaccessible states. The bill is now in the hands of the House Judiciary Committee, which is overseen by Representative Bob Goodlatte (R-VA 6th District). Online Stores, Inc. is part of eMainStreet Alliance, which was co-founded by Drex Davis. This alliance is a group of more than 300 online retailers who have united together to help lawmakers understand how detrimental MFA is. A recent letter was sent to the House Judiciary Committee emphasizing the costs of implementation for each organization. At OLS, the estimated cost of compliance will be $360,000 on sales of $30million during the first year.

On the topic of expenses, Gary Shapiro, the Head of the Consumer Electronics Association and supporter of MFA stated that decrypting, gathering, and paying taxes to 10,000 jurisdictions will be “relatively simple.” Online Retailers beg to differ by contrasting that each jurisdiction has its own laws for sales tax to all sorts of goods from food to non-prescription drugs. In addition, within the same zip code different tax rates can apply. Software systems would cost thousands of dollars with expensive updates every time a jurisdiction changes a tax code. Then, each online retailer will have to categorize their products in order to be decipherable by the software, which leaves small business owners to become specialists on every tax law in 46 sales-tax states. This is practically unmanageable.

If the House passes the Marketplace Fairness Act, audits will launch. The MFA bill will increase audits risk by at least 4500%. As many as 46 states are able to audit our business. This is frightening to OLS as well as the other 300+ online retailers.  Unfortunately, unlike big retailers like Wal-Mart, small businesses do not have mass accountants and tax attorneys to deal with exorbitant and laborious audits from every state. There are extreme penalties for disobedience to sales tax, including: repossession of personal possessions in order to collect unpaid sales tax owed by our businesses. That means auditors can seize homes and empty personal bank accounts if they conclude that an error has been made. Just ONE mistake could potentially put OLS, as well as other small online businesses, into bankruptcy. Big box retailers see the MFA as a way to put online mom and pop stores out of business – Congress please stand with small businesses and reconsider the MFA bill!

For more information, please view Kevin Hickey’s (CEO of OLS) presentation that was given at the IRCE Convention: IRCE Presentation

See also: The Cost of Complying with The Marketplace Fairness Act

Employee of the Month – May 2013

May’s office Employee of the Month is Customer Service’s very own Returns Coordinator, Denise Russell! Denise has been with the Online Stores family since October of 2008, coming here right after getting her Associate’s Degree in Accounting at Westmoreland County Community College.

As the Returns Coordinator, Denise is responsible for ensuring that customer returns and exchanges are processed quickly and efficiently, in addition to issuing Merchandise Return Labels (MRLs) by the end of each business day. She was nominated for her flexibility in her department, and her eye for detail. Her communication between other members in her department, and with customers is very commendable. Not to mention her attendance record and positive attitude toward the company are top notch!

Thank you, Denise, for your outstanding work!

DeniseRussellMay2013

Employee of the Month – May 2013

Jenni GongawareOnline Stores, Inc. is recognizing Jenni Gongaware from the warehouse for a third time! Jenni has been with the company for eight years this month and is continually putting in the effort to make this company run as smoothly and efficiently as possible.

This most recent award status spawns from Jenni’s outstanding reorganization of our United States Flag Store. It was no easy feat. In addition to the reorganization efforts, her management of the eBay replenishment project was completed in an organized and timely manner so that these items could be listed much quicker for our customers to enjoy.

Jenni is quite known around OLS with her cheerful attitude and “get down to work” ethics. She surely commits to her tasks at hand, and motivates those around her to excel, as well.

Thank you, Jenni, and congratulations!

PA Senator Pat Toomey Responds to OLS

Though many businesses have expressed distaste for the Marketplace Fairness Act to the Senate,  Online Stores, Inc. was shocked to hear that the bill was passed on May 6, 2013. Pennsylvania Senator Pat Toomey voted against the bill and replied to CEO, Kevin Hickey’s personal letter of the bill’s negative impact stating:

May 9, 2013

Dear Kevin,

Thank you for contacting me about the Marketplace Fairness Act (S. 743). I appreciate hearing from you.

As you may know, on May 6, 2013, the Senate passed the Marketplace Fairness Act by a vote of 69-27. Among its provisions, this measure would enable state governments to levy sales taxes regardless of whether the transaction occurs in a physical store or online. I voted against this legislation because I am concerned that many difficult issues relating to this policy have not been addressed. While I understand the concerns that many retailers in my state have raised about online sales, I also have heard the concerns of online retailers who would be subject to the thousands of tax jurisdictions across the country. Moreover, in my view, the legislation’s small business exception of $1 million in revenue is too low and many mom-and-pop retailers could get swept into this costly new tax regime.

Establishing a new online sales tax system across the country is a very significant, complicated proposal. It has the potential to impact almost every American consumer and our entire retail industry. In my opinion, such legislation should first come before the Senate Finance Committee and receive public hearings and careful vetting before being considered by the full Senate. Unfortunately, S. 743 was rushed to the Senate floor without the benefit of such committee hearings or vetting. Also, my colleagues and I were not allowed to offer amendments and try to improve the legislation during Senate debate.

Currently, S. 743 is pending before the House of Representatives for further consideration. As the legislative process continues, please be assured that I value your input and will keep your views in mind should the Senate revisit this matter.

Thank you again for your correspondence. Please do not hesitate to contact me in the future if I can be of assistance.

Sincerely, 

PatToomeySignature

 

Pat Toomey
U.S. Senator, Pennsylvania

 

Pennsylvania Senator, Bob Casey who voted in favor of this bill, has yet to respond to Online Stores concerns after multiple requests.

See also:The Cost of Complying with the Marketplace Fairness Act

See also: OLS Sends Press Release About Negative Impact of the Marketplace Fairness Act

The Cost of Complying with the Marketplace Fairness Act

With the decision to pass the Marketplace Fairness Act drawing closer, Online Stores Inc., has determined that the costs to comply with the proposed bill is going to be exorbitant for small businesses. OLS has sat down and deciphered just how much it is going to cost in the first two years of implementation.

Several different costs will be associated with the passing of the new bill. Among these costs include management time to review the obligations, create an execution plan and determine how to monitor, the purchase of the software, set up and maintenance fees, and fees per transaction, just to name a few! All of these costs begin to accrue and after just one year, OLS has estimated its costs to be over $360,000!

Please see the attached spreadsheet outlining more specifically costs that OLS is expecting to endure with this passing bill:

Online Stores cost of sales tax compliance

See also: The Effect of the Looming Marketplace Fairness Act on OLS

See also: Online retailers call Internet sales tax a ‘nightmare’

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