EBay Push Complicates Momentum for Online Sales Tax Measure

EBay Push Complicates Momentum for Online Sales Tax Measure

Online commerce giant eBay Inc. has launched a campaign behind the scenes to greatly broaden an exemption from pending legislation for small online vendors; the legislation would mandate that they collect state sales taxes from their customers across the country.

A bipartisan agreement to exempt businesses with annual revenue less than $1 million helped solidify support for a Senate proposal (S 336) — and a companion House measure (HR 684) — that would authorize states to collect sales taxes on online vendors that do not have a physical presence within their borders.

A campaign for quick action on the Senate measure — sponsored by Michael B. Enzi, R-Wyo., and Majority Whip Richard J. Durbin of Illinois — has set off a lobbying blitz by businesses and interest groups on both sides of the issue.

EBay leads the opposition along with a number of vendors that it represents and the Heritage Foundation, a conservative think tank. They are squaring off against a loose alliance of backers of the legislation, including the National Retail Federation and online retailer Amazon.com Inc.

Supporters are pushing for quick action after a lopsided test vote on the issue last month. The Senate on March 22 approved, 75-24, an amendment to the budget resolution (S Con Res 8) expressing support for helping states collect sales taxes from online vendors.

While proponents of the Enzi bill try to prod Senate action, eBay has mounted an opposition campaign, arguing that the small-business exemption would leave out too many of the small vendors that offer goods for sale on the Internet.

The scope of the small-business exemption has long been a sticking point for the legislation. A feud among supporters was resolved when Enzi and other Senate allies agreed to raise the revenue ceiling for the exemption from $500,000 to $1 million to match a similar proposal (HR 684) in the House sponsored by Rep. Steve Womack of Arkansas. Backers said the exemption would cover the vast majority of online sellers.

But eBay argues that sales taxes should only be paid by larger sellers. It has looked to replace that exemption in both bills with one of two alternatives: a higher revenue ceiling that would be set by the Small Business Administration, not lawmakers, or an exemption based on the size of a vendor’s workforce, not revenue.

“We believe that would impact a number of small businesses who should be protected from any new tax burden or any negative impact,” said Brian Bieron, eBay’s senior director of global public policy.

Bieron, formerly a top aide to former House Rules Chairman David Dreier of California, said the company has suggested lawmakers adopt the same small-business exemption of 50 employees used in the Affordable Care Act (PL 111-148, 111-152). “We would say exempt everyone that has fewer than 50 employees,” Bieron said.

If lawmakers want to provide an exemption based on annual sales, Bieron said it should be left to the Small Business Administration, not Congress. He pointed out that SBA sets a generous revenue cap of $30 million for businesses engaged in electronic shopping.

But the idea of raising the revenue ceiling to $30 million was shot down by key backers of both the Senate and House bills.

“Sen. Enzi will not support a $30 million exemption,” said Daniel Head, a spokesman for the lawmaker.

“It neuters the bill,” Womack said. “If you are not careful, you will defeat the purpose of the bill.”

Christina Mulka, a Durbin spokesman, said he also was sticking to the $1 million revenue cap. “Brick-and-mortar retailers — large and small — must begin collecting sales tax at their first dollar of sales,” Mulka said.

For now, Enzi and other lawmakers have taken no public position on the idea of basing the exemption on work force size. Head said Enzi was “always willing to sit down and listen to the concerns of eBay, but he will not negotiate policy through the media.”

Womack said he was in talks with House Judiciary Chairman Robert W. Goodlatte, R-Va., about possible compromise language that could allay concerns of opponents.

While eBay argues for major changes in the legislation, supporters like Amazon are pressing for fast action on Capitol Hill.

“The recent Senate vote demonstrates strong support for the bill, and now is the time to pass this legislation,” said Paul Misener, Amazon’s vice president of global public policy.

In the Senate, the bill faces concerns from Finance Chairman Max Baucus of Montana. He has cited concerns about the complexity of collecting sales taxes for multiple states, cities and counties, and the impact on Montana and four other states with no statewide sales tax. The other states without sales taxes are Alaska, Delaware, New Hampshire and Oregon.

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