The freewheeling, somewhat tax-free, internet business community consists not only of big businesses like Amazon.com, but also of innovators and small entrepreneurs who create self-employment, supplement incomes, and sometimes just have fun doing what they are doing.

Yesterday Mandy noted that the feds are about to authorize states to tax internet sales, Fight Over Online Sales Tax Bill Heats Up in Senate.  The key point is that states now have difficulty collecting taxes from sellers unless the internet business has a physical presence in the state.  The new law will change that and make mom-and-pop internet sellers tax collectors for the states.

Amazon.com doesn’t care since it has the staff and technology to handle the paperwork. This is yet another example of how regulatory burden favors big business.

(Update — thanks to commenter for tip) The new law apparently would apply only to businesses with sales over $1 million, a point missing from much of the discussion and worry about the law.

A reader commented in response to Mandy’s post as follows:

I have a small hobby business. I specialize in painting pet portraits. I do not make a lot of money from this. I do it because I love to paint and love to see how people enjoy seeing their pets in a portrait. It truly brings joy to their life remembering pets that have passed or have a painting of their current pet. I keep my prices low so people can afford an original oil painting of their pet.

I sell most of my paintings thru the internet. This will put me out of business. I do not sell many per year and the increased burden of learning all the tax regulations for all 50 states and local municipalities is just not worth continuing….

If this tax goes through I will not be able to continue. This is a hobby business! I work full time. If this legislation passes and I need to add the burden of collecting taxes country wide, not to mention exposing myself to every tax jurisdiction in the country, just for an additional $1200.00 it truly is not worth the effort.

There will many people in my position who just will have to close up their business because of the increased burdens our government keeps piling on us. That’s the world we are being forced to accept.

(added) As noted above, that commenter’s fears may not be realized, but the new law still will stifle competition and will benefit local retailers and the largest internet retailers over the competition. $1 million in sales might mean a small profit margin, so the burden still is great.


Click the link in the Tweet above and it takes you to a screen where you can find the number to call very easily:

Heritage Action Call Alert Internet Sales Tax