Imagine you own a small business that makes a few internet sales a day, and now you have to comply with sales tax withholding laws for 10,000 taxing districts throughout the United States.
Oregon Sens. Ron Wyden and Jeff Merkley, both Democrats, have reintroduced legislation that would stop states with a sales tax from burdening small businesses with this responsibility. Last year, the Supreme Court’s Wayfair ruling overturned precedent, allowing states to collect sales tax from out-of-state businesses, even if they do not have a physical presence in the state.
But, Merklely tells OPB, “The Amazons of the world, or the sizable businesses, they have the infrastructure to be able to do this, and that’s not such a burden. But to a small business it’s an enormous burden.”
A few states are requiring businesses with as few as 200 transactions a year to comply with their sales tax laws.
What the Senators are Proposing
The Online Sales Simplicity and Small Business Relief Act would create an exemption for small businesses that have less than $10 million a year in total sales. It would also ban retroactive taxation, preventing states from imposing taxes on sales from before the Wayfair decision.
The legislation would also give businesses a period of time to implement the necessary infrastructure to collect sales taxes, banning states from imposing remote sales tax collection before January 1, 2021.
In addition to Wyden and Merkley, the bill is co-sponsored by Sens. Jeanne Shaheen and Maggie Hassan, Both are Democrats from New Hampshire, another state that does not charges sales taxes.