Business Resource Center

Grow your business

Internet Sales Tax: What’s all the fuss about?

Key Facts

  • PayPal and eBay Inc. believe it is essential to protect small businesses from tax burdens that would threaten their growth and survival. Any Internet sales tax legislative proposal must include a robust small business exemption.
  • To learn more about this issue, click here.

Remote sales tax. Nexus tax. Distant sales tax. Streamlined Sales Tax Project (SSTP). Internet sales tax. Online sales tax. No matter what you call it, PayPal and eBay Inc. oppose any attempt to impose Internet sales taxes on small Internet-enabled businesses. With companies struggling nationwide, now is the wrong time to require small online businesses to collect and remit sales taxes.

Nexus and the Wisdom of Protecting Interstate Commerce

Legislators are considering imposing online sales taxes, despite a 1992 Supreme Court ruling that declared no state has the power or authority to impose sales tax collection on businesses that have no physical presence, or nexus, in the state. Under the current proposal, to collect and remit sales taxes, small businesses would need to keep track of sales tax rules for up to 9,600 jurisdictions nationwide. This would impede interstate commerce by discouraging businesses from selling their goods and services across state lines. Under the U.S. Constitution, no state has the authority to impede interstate commerce.

The Importance of the Internet to Small Businesses

The Internet is essential for small business growth, enabling small businesses to reach new markets and non-local consumers, and increase productivity. For decades, large businesses and corporations were the only companies that could access interstate and global markets. The Internet changed all of that. More than 60% of small businesses today sell products and services online.

The proposed new sales tax requirements would make it harder for small Internet-enabled businesses to compete. Small businesses would face increased compliance costs and greater liability risks, and would increase their prices to cover these costs.

Protecting Small Internet Enabled Businesses

PayPal and eBay Inc. recognize the significance of small businesses, which have always been the lifeblood of the American economy and are helping drive our nation’s economic recovery. In fact, over the past 15 years, 70% of new U.S. jobs were created by small businesses.

PayPal and eBay Inc. believe it is essential to protect small businesses from tax burdens that would threaten their growth and survival. Any Internet sales tax legislative proposal must include a robust small business exemption.

To learn more about this issue, click here.