Shaheen Introduces Bill to Protect Small Businesses From Burdensome Internet Sales Tax Collection Requirement

December 07, 2018

Legislation Bans Retroactive Taxation, Creates an Exemption for Small Businesses & Establishes Timeline for Businesses to Adjust to New Regulations 

(Washington, DC)— U.S. Senator Jeanne Shaheen (D-NH), a member of the Senate Small Business & Entrepreneurship Committee, introduced the Online Sales Simplicity and Small Business Relief Act with Senator Ron Wyden (D-OR), the lead Democrat of the Senate Finance Committee, and Senators Maggie Hassan (D-NH) and Jeff Merkley (D-OR). The bill would prevent new red tape from being imposed on small businesses as a result of the Supreme Court ruling in South Dakota v. Wayfair, Inc. This Supreme Court ruling overturned a previous precedent, and will allow states to collect sales tax from out-of-state businesses as soon as January 1st. This new burden will hurt small businesses, which do not have the resources to navigate collecting sales taxes for more than 10,000 taxing jurisdictions across the country. 

Specifically, the bill would ban retroactive taxation, preventing states from imposing sales tax collection responsibilities on sellers for any sale that occurred prior to the Wayfair decision. The bill would also create an exemption for small businesses that see less than $10 million a year in total sales.  Additionally, the legislation would also establish an orderly phase-in of compliance obligations, preventing states from imposing remote sales tax collection duties before January 1, 2020. 

“Forcing New Hampshire businesses to adopt and adhere to a new, complicated tax collection system, particularly as retailers approach the busiest time of the year, is entirely unfair and impractical,” said Senator Shaheen. “New Hampshire doesn’t collect a sales tax, and our small businesses shouldn’t have to bear this burden for other states. That’s why this bill is so important. Congress needs to focus on empowering our small businesses by breaking down barriers that impede our entrepreneurs from succeeding. I believe this bill does just that, and I urge Senate Leadership to prioritize this important, commonsense legislation.” 

“Small businesses in Oregon should be focused on making this holiday season their most successful one yet. Instead, owners are living in fear,” said Senator Wyden. “They’re thinking about what jobs they might have to cut because of compliance costs and financial burdens that await their online business in the New Year. Led by Senator Shaheen, this bill protects small businesses from cash grabs by out-of-state politicians, bans retroactive tax bills and delays outrageous collection requirements. Action by Congress is the only way to give small businesses more time to prepare for this new and disastrous internet sales tax regime.” 

“We must protect New Hampshire small businesses from the backward Supreme Court ruling that will require businesses to collect internet sales tax for other states,” said Senator Hassan. “This commonsense legislation would exempt small businesses making less than $10 million a year in total sales from having to collect internet sales tax, while also banning retroactive sales tax collection. I will keep fighting to preserve New Hampshire’s competitive advantage that results from our lack of a sales or income tax and to defend our small businesses from unnecessary burdens that stifle economic growth.” 

“Small business owners in Oregon should be able to focus on making their businesses a success, not forced to collect a thousand different taxes for other states,” said Senator Merkley. “We need to respect the will of Oregonians, and make sure our small businesses aren’t ringing in the New Year by juggling burdensome new requirements.”    

Representative Sensenbrenner (R-WI) recently introduced a similar bill in the House of Representatives. The text of Senator Shaheen’s bill, the Online Sales Simplicity and Small Business Relief Act, is available here. 

Last month, Shaheen and Wyden sent a letter with Senators Merkley and Hassan, urging Senate Leadership to take action before the end of the year to protect small businesses from red tape resulting from the South Dakota v. Wayfair, Inc. case. Senator Shaheen successfully led efforts to stop the Marketplace Fairness Act, which was first introduced in 2011 to impose these internet sales tax collection requirements. She previously worked with Senator Wyden and a bipartisan, bicameral group of members of Congress to file an amicus brief in the South Dakota v. Wayfair, Inc. case, in opposition to South Dakota’s argument. The Supreme Court’s dissenting opinion cites a Government Accountability Office report that was requested by Senator Shaheen detailing the burdens that a sales tax collection requirement will place on small businesses. In June, Shaheen introduced legislation with Senator Jon Tester (D-MT) – the Stop Taxing Our Potential (STOP) Act – to overturn the Supreme Court case.