Grand Junction, CO, May 22, 2013 -- Garage Flooring LLC, a small business selling garage flooring and storage, is joining a growing chorus of small businesses that are taking issue with the Marketplace Fairness Act, which has passed the Senate and is awaiting House action.
The legislation, which would impose sales taxes on Internet and catalog purchases, has been touted by Walmart, Home Depot and other mega retailers as a bill to help small businesses.
However, according to Justin Krauss, co-founder and president of Garage Flooring LLC, it actually does the opposite of what it claims.
“This bill would force over 20,000 small and medium sized businesses across the country to collect sales tax for all 46 states," Krauss said.
"It would also expose us to a barrage of audits from states where we have no physical presence, voting rights or political representation. It will put many of us out of business.”
Krauss says that the bill has been misrepresented by big business and senators alike.
“There are two huge falsehoods being spread about this bill. The first misconception is that this bill is beneficial to small businesses and the second is that this bill will cost small businesses almost nothing to implement. They are both completely inaccurate.”
Walmart and other supporters claim that the bill will be good for small businesses because it will allow mom-and-pops to compete with other small businesses online.
However, Krauss doesn't believe it.
“When was the last time Walmart did anything to help mom-and-pop businesses? This bill is designed to cripple small businesses like mine and bury us under a mountain of tax compliance and remittance costs. We pose a threat to Walmart, just like all other small businesses because the internet is the last place where we can actually compete on a level playing field with big box retailers and they don’t like it.”
Supporters also claim that a ‘free software’ will be provided by the states which will eliminate the cost of collecting the taxes.
Kevin Hickey of OnlineStores.com says this too is totally false. “The notion that we can simply download a free software and wave a magic wand is absurd. If the cost of compliance is virtually nothing, why does Walmart employ an army of tax attorneys and accountants to sort through tax laws and to deal with compliance. We estimate that our compliance and remittance costs in the first year alone will be over $40,000 dollars. And it gets worse from there.”
Small businesses who sell items online will have to incur additional costs on top of any integration fees as well. “Those of us who sell online will not only have to integrate new sales tax software with our websites, we’ll also have to upgrade to more expensive accounting systems, train our staff on the sales tax laws of all 50 states, submit monthly sales tax returns to 46 states, deal with a mountain of accounting issues such as sales tax exemptions forms, sales tax holidays, tax audits and more!” says Krauss.
Hickey says there’s another massive cost buried in this bill. “Many of us will have to classify products into thousands of different tax categories and face retribution for states if we accidentally mix things up. In Wisconsin, for example, US Flags and WI State flags are usually tax free while other flags are subject to sales tax. That same flag bundled with a flag pole changes the rules. It’s different in every state.”