Business owner battered by court's sales-tax ruling

Like so many other small online businesses, I started my business because of changes happening in our family’s life that I had to adapt to — and take advantage of. In 2001, my husband received a job offer and we relocated from Philadelphia to Kalispell. I had difficulty finding work in my field of accounting that would support my family, so I started selling items on eBay. Eventually, I managed to turn my simple hobby into a small business.

After my husband was out of work due to the economic downturn, I managed to even further expand my business. Great Sky Gifts quickly grew and became a very successful small business. My business now provides jobs for four people in the Flathead Valley. It also provides free training that teaches employees and community members how to sell items online so they can help support their families. I am able to show other small independent business how the use of the internet can help reach customers around the world and therefore increase their profits dramatically.

While focused on my business, I had been nervously waiting for word on a decision in the Supreme Court case South Dakota v. Wayfair. I participated in this case by signing onto a brief with other small business owners who sell on eBay.  Unfortunately, the court decided to overturn the 1992 precedent that decided that states can only impose sales taxes on businesses that have a physical presence in that certain state and leaves a great deal of uncertainty that needs to be addressed by Congress or in more litigation. States will be able to collect taxes from businesses even if they do not have a physical presence in that state. In addition to increasing the taxing power of individual states, it greatly expands the regulatory state, harming economic growth.

The court ruling did recognize that there are differences between large and small online retailers and so some protections for small businesses may continue. South Dakota’s law exempted sellers with less than $100,000 in sales or 200 customers in that state. Since the law was upheld, those protections remain in place, but we sellers need a lot more certainty and protection and it should be consistent nationally.

As a small online retailer based in Montana, I should not be obligated to hire the lawyers and accountants necessary to work out the sales tax for every customer that makes purchases from me around the United States and the world. There are over 10,000 tax jurisdictions in the United States that I would need to comply with, and I could not keep up with the burden of figuring out the taxes on customer purchases. I would suddenly be forced to collect and pay taxes in states where I don’t reap the benefits of those taxes or have any representation to protect my interests. Without the current standard of physical presence, I could suddenly become subject to audits from states where I don’t reside and could be on the other side of the country.

Collecting taxes and being forced to comply with over 10,000 tax jurisdictions would place a huge burden on my very small business. This would be an administrative nightmare and a financial burden that would seriously jeopardize my business.  The additional costs that this would require would prevent me from supporting my employees and would also keep me from being as successful as I am today. The system that has been in place for over 20 years has been fair and simple and allowed small online retailers like me to build our businesses.

A system in which small businesses have to compete with larger businesses by collecting and navigating the tax laws of thousands of jurisdictions creates a huge burden. Giant online retailers have the resources and teams of lawyers and accountants to do that, but I don’t.  It would create an unfair playing field for future smaller online retailers as well.

Today, I am very concerned about the outcome of this case and the impact it may have on my business — and others like mine.

Now we need to look to our members of Congress to step in and pass legislation that protects our small businesses from any negative impacts of the court’s decision and ensures that small businesses, like mine, continue to grow. A clear standard has been struck down and we need a new national standard that protects small sellers. Congress is tasked with handling issues of interstate commerce, and our representatives need to find a reasonable national solution and find a way to protect us from the unreasonable burden of complying with thousands of tax jurisdictions. Otherwise, it could prevent small businesses from being as successful as we are today and put our existence in real jeopardy.

Rast, of Kalispell, owns the Evergreen-based Great Sky Gifts.