eBay calls on users to fight sales tax bill as vote nears

eBay is orchestrating a lobbying effort of unprecedented scale to help change looming federal legislation that would tax online retail sales.

eBay CEO John Donahoe began emailing millions of the company’s online marketplace users Sunday to ask them to help defeat the legislation, which he says would unfairly burden small merchants in its current form. Reuters first reported Donahoe’s massive email campaign against the Marketplace Fairness Act, proposed legislation that would allow states to require that online retailers collect sales tax on any purchases shipped to the state.

The bill, which will be voted on in the Senate as early as today, is aimed mainly at Amazon and is backed by hundreds of retail organizations, such as the National Retail Federation, and brick-and-mortar retailers, who have long complained that online retailers have the unfair advantage being exempt from sales tax.

The legislation exempts merchants making less than $1 million in annual out-of-state revenue. But in his email to eBay online marketplace sellers, Donahoe said that cutoff is too low. He argues that merchants with less than $10 million in annual out-of-state sales, or fewer than 50 employees, should be exempt.

“This legislation treats you and big multi-billion dollar online retailers — such as Amazon — exactly the same,” Donahoe wrote. “Those fighting for this change refuse to acknowledge that the burden on businesses like yours is far greater than for a big national retailer.”

The campaign is one of the largest-ever grassroots efforts by San Jose-based eBay, a technology company and e-commerce powerhouse that has risen to Amazon-like prominence in recent years. Some news outlets report that the company plans to send more than 40 million emails.

The eBay government relations Twitter account is alight with activity, tweeting messages such as  “Do you think #SmallBiz owners should be forced to act as tax collectors in all states? Neither do we” and “The #InternetSalesTax proposal does nothing to protect #SmallBiz. Tell Congress to fight for real #SmallBiz exemption”.

The company is also gathering signatures to oppose the legislation on its government relations website. eBay provides a letter that users can send to Congressional representatives, which reads: “Please speak up and oppose the Marketplace Fairness Act. Make sure any Internet sales tax legislation fairly protects small businesses, the jobs they create and the consumer benefits they provide. Legislation should support small businesses, not put them out of business.”

Not all eBay sellers are on board. The Twitter account for Pennsylvania resident Ricardo Signes tweeted on Monday: “Email from eBay Government Relations department makes me want to oppose whatever they’re pushing for.”

Another tweet from Pan Ellington reads “Dear @eBay government relations, I will not call my congressperson to halt ‘unfair’ internet taxes on your behalf, capitalist freaks.”

Amazon also runs a popular marketplace for online sellers, although eBay, which started as an online auction site for nonprofessional sellers, is more popular with small merchants. Amazon has supported a $500,000 annual sales exemption in an earlier version of the legislation, arguing that anything higher would give too many small online sellers an unfair advantage.

Other outspoken opponents to the Marketplace Fairness Act include e-commerce trade association NetChoice, which says the tax bill threatens the country’s economic recovery by burdening consumers and small business owners.


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  • RegularGuy

    IL passed a tax on online sales for companies with a presence in the state. The law’s sponsors predicted it would collect $150M a year for the State. In it’s first year it collected just under $4M, but more importantly, it drove a number of employers like FatWallet.com and Coupon Cabin out of the state, costing hundreds of jobs.

    If this measure passes at the federal level, look for businesses (and their jobs) to head offshore to avoid the tax.

    • John

      It looks like this national legislation is distinct from state level requirements as it does not share the same “local presence” stipulation. Relocating would not make a company exempt from collecting the taxes. Note also that businesses with sales less than $1M would be exempt. I’m not sure what that would mean for eBay. Is the tax collection noncombat on eBay (greater than $1M) or on the original seller (less than $1M).