A new legislation, known as the Marketplace Fairness Act, will allow states to require online retailers to collect and remit use tax on purchases shipped into their states. The new legislation will only affect businesses that generate over $1 million in out-of-state sales, however, John Donahoe, CEO of eBay, says that merchants who generate less than $10 million in sales, and/or have less than 50 employees, should also be exempt.
Donahoe began sending out emails earlier this morning and hopes to reach at least 40 million eBay users within the next few days. He encourages users to send a message to the members of Congress asking them to consider some changes to the legislation. In the email Donahoe states that the legislation puts both small merchants, and big retailers like Amazon in the same category, which is unfair to the vast majority of merchants. In an email viewed by Reuters, Donahoe wrote,
“This legislation treats you and big multi-billion dollar online retailers – such as Amazon – exactly the same. Those fighting for this change refuse to acknowledge that the burden on businesses like yours is far greater than for a big national retailer.”
Amazon stated in regards to the legislation that giving merchants who generate more than $500,000 in annual sales would give them an unfair tax advantage over large retailers. However, compared to eBay’s small merchants, Amazon has less to lose if this legislation passes. Donahoe stated in the email that Amazon makes over $10 million in sales every 1 1/2 hours, giving it more resources than a small merchant to remit taxes. Many speculate that many major retailers are in support of this legislation because it would limit the powers of smaller merchants.
This new legislation will affect both eBay users and small merchants alike. Merchants will be required to pay sales tax to the state that its product is shipped to, meaning they will have to familiarize themselves with the 9,600 separate tax jurisdictions. With smaller merchants requiring to pay sales tax to the states, much of the slack will fall upon consumers. eBay encourages its users to send a message to the members of congress within the next few days and ask that amendments be made to the legislation to make it less burdensome.