Why Small Business Needs Congress to Close the Online Sales Tax Loophole

Photo - #efairnessnow supporter.

Courtney at Holdfast Printworks in North Carolina.

In the next few weeks, Congress has the opportunity to fix a tax loophole that’s been hurting small, independent retailers for years.

While big online retailers get out of collecting sales taxes, small, brick-and-mortar stores have to charge customers prices that can be as much as 12 percent higher in some cities. Last year, the Senate passed a bill, the Marketplace Fairness Act, that would finally level the playing field for small businesses, by a bipartisan vote of 69 to 27. But if the House doesn’t act before Congress’s current lame duck session ends, the bill will die, and local business owners and supporters will have to start over.

There’s a fierce debate in the House about whether to take up this issue.  Help us convince Congress to act by joining our campaign for E-Fairness Now. Continue reading

Local: A Better Way to Shop

Graphic: Local: A Better Way to Shop (detail)

If you are shopping online today, we hope you are doing so with independent businesses! An analysis by the Institute for Local Self-Reliance found that, for every $10 million in sales, independent retailers create 57 jobs, while Amazon creates just 14.

For more great facts on shopping locally, check out AIB’s Shopping Local for the Holidays infographic.

Continue reading

Shopping Local for the Holidays: AIB’s Infographic Has the Facts to Know

Infographic: Holiday Shopping LocallyWhile analysts are already chattering about which big-box stores will open on Thanksgiving Day this year, the resurgence of independent business is the holiday shopping story that’s more important to many Americans.

Six in 10 customers say they go out of their way to shop at locally owned stores, and their support is fueling brick-and-mortar merchants, like the more than 50,000 independent businesses that are part of Local First alliances across the country.

This season, events like Neighborhood Toy Store Day, Back to Black Friday, Indies First, Shift Your Shopping, and Small Business Saturday will draw tens of thousands of people into independent retail stores.

For the key facts about shopping locally this holiday season, check out this infographic, put together by the Advocates for Independent Business. Click on the image to view and save a larger version, and see below for thumbnails of three smaller images that are easily shareable on social media. Click these to enlarge and download.

For more information, download the AIB’s press release about shopping local for the holidays, below.

AIB-Shopping Local-Press Release


Infogrpahic: Growing Popularity.






Infographic: Economic Returns.






Infographic: Expanding in Numbers

AIB Launches #Efairnessnow Campaign to Persuade Congress to Close the Internet Sales Tax Loophole

EFairnessFor independent business owners, and the customers and communities that love them, e-fairness is critical to competing on a level playing field with online mega-stores. That’s why this week, in a campaign launched by the Advocates for Independent Business and Local First groups, people who rely on independent businesses are calling on their elected officials in Congress to seize a rare window of opportunity and vote to close the internet sales tax loophole.

While large online retailers are exempt from collecting sales taxes, independent brick-and-mortar shops are required to impose state and local sales tax rates of six to 12 percent on their customers — an added cost that makes it hard for Main Streets to compete. One recent study, by economists at Ohio State University, analyzed spending patterns of over 240,000 households and found that this disparity is driving a significant share of business to Amazon.com, at the expense of independent stores and all of the jobs and secondary economic impacts that they create.

The U.S. Senate already knows this. Last year, it voted overwhelmingly — 69 to 27 — to pass the Marketplace Fairness Act, which allows states to require large internet retailers — defined as those with over $1 million in online sales — to collect sales taxes. But then, the issue stalled in the House.

On Monday, Congress returns for a brief session, and in the next three weeks, it must vote to reauthorize another online tax-related issue, a long-standing ban on internet access taxes. Members of Congress who support e-fairness are urging their colleagues to take this opportunity to also pass online sales tax legislation, and combine the Internet Tax Freedom Act and the Marketplace Fairness Act into one bill.

efairnessnow-6To urge Congress to vote for fairness, AIB and its allies are teaming up on a social media campaign calling for #efairnessnow. Over the years, Congress has heard from thousands of small business owners on this issue. Now, they’re going to hear from those businesses’ customers — the millions of people who love and depend on independent stores — as they contact their members of Congress and take to Facebook and Twitter with the hashtag #efairnessnow.

For ways to get involved, check out AIB’s campaign page for shareable images, suggestions, and additional information on why small businesses need #efairnessnow.

AIB Groups Urge Senate to Pass Marketplace & Internet Tax Fairness Act

In a letter sent this week to every member of the U.S. Senate, AIB member organizations cheered the introduction of the Marketplace & Internet Tax Fairness Act and urged its passage.

The legislation, which authorizes states to pass legislation requiring internet and other remote retailers to collect sales tax, was introduced by Senators Mike Enzi (R-WY), Dick Durbin (D-IL), Lamar Alexander (R-TN), Heidi Heitkamp (D-ND), Susan Collins (R-ME), and Mark Pryor (D-AR).   In order to take advantage of this new authority, states must simplify their sales tax rules and exempt small online retailers (under $1 million in annual sales) from collection requirements.

MITFA would level the playing field for independent brick-and-mortar businesses, which are currently operating at a 5-10 percent competitive disadvantage to online retailers that are not required to collect sales tax.

Last year, the Senate overwhelmingly passed the Marketplace Fairness Act (MFA). However, with little progress on the bill in the U.S. House of Representatives, MFA sponsors decided to add the e-fairness legislation to an extension of the Internet Tax Freedom Act, a law that prohibits states from levying taxes on Internet access, which is set to expire on November 1. This week, the House passed its own extension of the law, the Permanent Internet Freedom Act, which would extend the tax ban permanently.

The House bill does not include an internet sales tax provision.  If the MITFA passes the Senate, it will then have to be reconciled in conference committee with the House version of the bill.

MIFTA sponsor and long-time advocate for sales tax fairness, Sen. Durbin expressed concern about how the House would respond to MITFA. “The House is always a problem,” Durbin said, as reported by Roll Call. “We have tried repeatedly, repeatedly for meetings with House members to talk about finding common ground. They have canceled every meeting. So this is our approach. We want to join Marketplace Fairness with Internet Tax Freedom. I hope we can do that on the floor of the Senate and send it back to the House.”

AIB Letter to the U.S. Senate

Dear Senator:

On behalf of the Advocates for Independent Business (AIB), a coalition of 14 trade associations and other organizations that represent locally owned, independent businesses serving a consumer market, we are writing to express our strong support for the Marketplace and Internet Tax Fairness Act (MITFA). AIB’s member organizations collectively represent more than 100,000 small businesses that employ approximately 600,000 people and pay in excess of $10 billion in annual payroll.

MITFA allows states and local governments, if they so choose, to enforce existing state and local sales and use tax laws — so long as they simplify sales and use tax administration and collection, and exempt small online retailers from collection requirements. This bill would level the playing field for Main Street businesses that are currently working at a five percent to 10 percent competitive disadvantage versus remote retailers that are not collecting and remitting sales tax to states. MITFA would provide a pathway for states and localities across the country to collect an estimated $23 billion annually in uncollected tax revenue to balance their budgets by recouping taxes that are already owed.

It is crucial that sales tax fairness pass in this legislative session. Our member retailers simply cannot wait for another legislative session to address an issue that is critical for both small and large Main Street retailers alike.

Sales tax fairness would not institute a new tax, nor would it burden small businesses with extra tax paperwork. Instead, it would level the playing field. Main Street retail stores give back to their communities in ways that out-of-state retailers do not: We provide local jobs; we employ local services; we remit sales tax revenue that pays for roads and first responders, among other services. Yet the current system penalizes Main Street retailers by providing out-of-state e-commerce retailers with an unfair sales tax advantage.

Our member stores, and other retailers, should not have to face another holiday season without a solution to this problem. The time has come to act. The solution is clear, so let’s delay no longer. The failure to act will have a massive impact on the overall American economy, with the possible loss of many thousands of retail jobs.
Thank you for your consideration.

Advocates for Independent Business:

  • American Booksellers Association
  • American Independent Business Alliance
  • American Specialty Toy Retailing Association
  • Independent Running Retailers Association
  • Independent We Stand
  • National Bicycle Dealers Association
  • North American Retail Hardware Association
  • Real Diaper Industry Association
  • Record Store Day
  • Soccer Dealer Association


AIB’s Backgrounder on the Small Business Credit Crunch

business-lending-loan-sizeA significant share of locally owned businesses are struggling to secure the financing they need to grow.  Our 2014 Independent Business Survey found that 42 percent of local businesses that needed a loan in the previous two years had been unable to obtain one.

One consequence of this credit shortage is that many small businesses are either not adequately capitalized or have been forced to rely on high-cost alternatives to conventional bank loans, such as credit cards. Both scenarios make them far more vulnerable to failing.

Lack of sufficient small business capital is a major concern for the economy.  Historically, about two-thirds of net new job creation has come from small business growth and studies show locally owned businesses contribute significantly to the economic well-being of communities.

To help inform its member organizations, AIB has produced a Backgrounder on the Small Business Credit Crunch.  These are some of the key take-aways:

  • About three-quarters of small business credit comes from traditional financial institutions.  At the beginning of 2014, banks and credit unions had about $630 billion in small business loans on their books
  • Since 2000, the volume of business lending per capita at banks has grown by 26 percent, but this expansion has entirely benefited large businesses.  Small business loan volume at banks is down 14 percent and micro business loan volume (business loans under $100,000) is down 33 percent.
  • Local community banks provide a disproportionate share of small business loans.  Indeed, it is their declining market share that is largely to blame for the constriction in small business lending.  As they lose ground to big banks, there are fewer financial institutions focusing on small business lending and fewer resources devoted to it. The top 4 banks now control 43 percent of all banking assets, but account for  only 16 percent of small business loans.
  • Credit unions have expanded their role in small business lending, from $14 billion in business loans ten years ago to over $44 billion today.  However, only about one-third of credit unions currently participate in this market.
  • The U.S. Small Business Administration’s loan guarantee programs have historically played an important role in expanding credit to small businesses that don’t quite meet conventional lending requirements.  However, over the last few years the SBA has reduced its support for very small businesses and shifted more of its loan guarantees to larger businesses. Since the mid 2000s, the number of business loans under $150,000 guaranteed by the SBA each year has fallen from about 80,000 to 24,000.  Meanwhile, the SBA’s average loan size has more than doubled to $362,000.

The Backgrounder outlines several broad policy solutions, with a focus on strengthening and expanding community banks, increasing credit union business lending, and reorienting the SBA’s loan guarantee programs to once again cater to the needs of businesses that are truly small.

AIB Statement on House Judiciary Committee’s Internet Sales Tax Hearing

March 11, 2014

WASHINGTON D.C. – The Advocates for Independent Business, a coalition of 11 national organization representing over 100,000 small businesses, issued the following statement regarding tomorrow’s House Judiciary Committee hearing on “Alternative Solutions to the Internet Sales Tax Issue”:

“This is a critically urgent issue for the nation’s small businesses. Current tax policy distorts free market competition by requiring local brick-and-mortar retailers to collect sales taxes while exempting many of their online competitors.  In our recent poll of over 1,200 small independent retailers, more than 75 percent said that this disparity was negatively impacting their sales.”

“We appreciate the leadership of Representative Goodlatte and the committee’s thoughtful examination of this issue.  It’s been more than 21 years since the U.S. Supreme Court issued its Quill ruling inviting Congress to address the question of sales tax and remote sellers.  We hope this hearing will lead to swift legislative action in the House.  Our small business members believe now is the time for Congress to finally resolve this issue and give small businesses an opportunity to compete on a fair and level playing field.”   Continue reading