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Article posted: 4/27/2013 8:56 AM

eBay taps consumers in sales tax battle

By

WASHINGTON -- E-commerce giant eBay is pulling its customers into its fight against legislation that would allow states to collect sales tax on online transactions, warning that the measure will lead to higher prices.

The bill, the Marketplace Fairness Act, is expected to be approved by the Senate this week, but is likely to face a tougher time in the House.

eBay began sending its millions of customers an email plea from John Donahoe, the company's chief executive, on Sunday, asking them to lobby their congressman to postpone action of the bill.

"For consumers, it means more money out of your pocket when you shop online from your favorite seller and small-business shop owner," Donahoe said in the email

eBay's plea focuses on how the bill could impact small businesses, including the millions of sellers that use its e-commerce site. They would have to juggle tax codes from "more than 9,600" jurisdictions to comply with the bill, Donahoe said.

The legislation exempts small businesses that make less than $1 million in out-of-state revenue from having to collect taxes on those transactions. But that is not enough, Donahoe argued.

The exemption should cover retailers making up to $10 million in out-of-state sales or that have fewer than 50 employees, Donahoe said in the letter. This is "reasonable exemption that would protect the small guys and allow them to grow and compete," his email said.

In a letter to the Senate Sunday evening, the National Retail Federation and other groups that back the bill dismissed Donahoe's concerns. The legislation "exempts 99 percent of all sellers and over 40 percent of all commerce," the groups said in the letter.

Proponents such as Amazon and Wal-Mart argue that the bill puts online businesses on more equal footing with physical retailers by giving states the ability to collect these taxes, which consumers are technically supposed to pay already -- but rarely do.

Still, eBay is not alone in calling for the Senate to take more time before passing the bill. Other opponents include Grover Norquist's influential Americans for Tax Reform and the Computer and Communications Industry Association, a tech industry lobbying group.

The Financial Services Roundtable, a group that represents nearly 100 of the country's largest financial services companies, said Monday that the Senate should hold hearings to examine the larger effect that the bill could have on retail investors.

"Based on how the tax is crafted, it would hit all financial services firms, and, our real worry -- consumers who are saving and investing," the roundtable's senior vice president, of public policy, Scott Talbott, said in an email.

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