Online Sales Tax — Good or Bad for Small Business?

In discussions on online sales tax, there is often an assumption that forcing online merchants to collect sales tax will be a benefit for local merchants. E-commerce sites like Amazon.com, the theory goes, have an unfair advantage over local brick-and-mortar stores. Shoppers will even use their local stores to find and try out products and then whip out their phones and order the products online in order to avoid paying sales tax. It’s more complicated than that. The discussion only looks simple when you compare Amazon with Aunt Fay’s little quilt shop on Main Street. In reality, there are plenty of small businesses online. These businesses might find it very difficult to deal with the complexities of online sales tax. And there are plenty of big businesses with brick and mortar stores collecting sales tax.

In fact, in most communities the majority of shopping venues are not locally owned — they’re big box stores and chains. Is it reasonable for Walmart to complain that Amazon has an advantage? What’s more, many Main Street shops currently have the option of branching out into e-commerce. Often, a small business will casually sell and ship to customers who have found the shop on vacation and emailed an order in. Implementing e-commerce in this way is simple now — but might not be once online sales taxes go into effect. At Sales Tax DataLINK, we think online sales taxes are on their way, and we’re prepared to help online merchants deal with the complexities. We also think we should go into this with a full understanding of the issues involved.

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