BY RUISHA QIAN

 

At a congressional hearing on Wednesday, Amazon said it, quote, “strongly supports” federal legislation that will allow states to collect online sales tax. The company’s stance is pitting it against online sales rival eBay.

First, SmartMoney explains the sales tax problem.

“Whether online retailers pay sales tax – and on what items – varies from state-to-state. Some states require online retailers to collect sales tax if they have a physical presence in that state where the item is being purchased. Otherwise, it’s up to consumers to keep their receipts and pay the tax.”

Paul Misener, the Amazon VP for public policy, spoke at the hearing. Mediabistro quotes Misener:

“Congress should authorize the states to require collection, with the great objects of protecting states’ rights, addressing the states’ needs, and leveling the playing field for all sellers… Sellers should compete on a level playing field.”

But eBay, which is composed of small retailers, feels the opposite. Marketwatch reports...

“The two largest e-commerce firms differ primarily on whether small businesses should be exempt from pending legislation that would require online retailers to collect taxes in states were they have no physical presence.”

eBay argues that small businesses can’t compete with larger retailers, Dan Marshall, a rep for the Michigan Retailers Association, says small retailers can handle online taxes.

“Well, that's a battle that retailers, small retailers join every day. And comfortably join. You know, it's a competitive world. And if, if you can't stand the heat, you shouldn't be in retailing. But as long as the field is level, you know, we'll battle big retailers. We have advantages over them.”

But The Wall Street Journal, citing marketing industry site Multichannel Merchant, says Amazon may be benefiting too much from the legislation.

“ … critics point out that Amazon could benefit … as it will offer to handle sales-tax chores for merchants selling through its site for a fee …”