Katie McAuliffe

MFA Software Integration to Cost up to $290,000 for Small Businesses


Posted by Katie McAuliffe on Wednesday, November 13th, 2013, 1:46 PM PERMALINK


Today the eMainstreet Alliance sent a letter to the House of Representatives emphasizing that, while major retailers are still pushing to passage of the Marketplace Fairness Act, the costs to comply with the MFA are overly burdensome, and the MFA, as written, does not comply with ANY of Chairman Goodlatte's seven principles of remote sales tax collection.

The MFA crushes small businesses with tens of thousands of dollars in compliance costs by turning them into tax collectors for 9,600 different tax jurisdictions. An independent, non-commissioned study by TruST found that integration costs for small to mid-sized businesses will range from $57,500 to $290,000. Faced with such a heavy burden, some small businesses have said they will be forced to close their doors.  The findings of the TruST study are consistent with eMainstreet business estimates of the costs their businesses will incur should the MFA go into effect.

Additionally, MFA does not meet any of the remote sales tax principles set out by Chairman Goodlatte:

“Chairman Goodlatte spelled out seven reasonable and common sense principles to guide any discussion of remote use tax collection legislation.  The MFA fails all seven principles.  One principle insists that any solution be “tech neutral”. This is an important safeguard for small businesses. Businesses should not be required to implement any third-party software to collect and/or remit sales taxes. We understand that proponents of the MFA are pressuring lawmakers to ignore both the clear meaning of Chairman Goodlatte’s principles as well as the heavy burdens the MFA imposes on businesses.  Please do not be deceived by special interests - the MFA is unwise and destructive legislation.”

To read the full letter, click here.

 

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Patent Trolls Beware: The Innovation Act is Here


Posted by Katie McAuliffe on Wednesday, October 23rd, 2013, 2:30 PM PERMALINK


Digital Liberty and Americans for Tax Reform welcome the introduction of House Judiciary Chairman Bob Goodlatte's (R-Va.) Innovation Act.  The bill, introduced today, addresses the rising number of abusive patent lawsuits that have stifled inovation and cost the American economy $80 billion per year. 

The Innovation Act raises standards for initial pleadings from patent holders, who would need to explain what patent is being infringed upon and how that infringement is occurring.  Another very important aspect of this legislation is fee shifting, which requires the loser to pay the victor's legal fees.

The following statement can be attributed to Katie McAuliffe, Executive Director of Digital Liberty & Federal Affairs Manager at Americans for Tax Reform:

"We would like to commend Chairman Goodlatte for his excellent work in moving patent reform one step closer to completion.  His legislation released today includes aspects vital to curbing the economically detrimental practices of patent trolls. Overall his legislation strikes an appropriate balance that will dramatically curb the troll problem, while still maintaing the value of American intellectual property.

"In a knowledge-based economy it is important to protect Americans' Intellectual Property.  Patents are an important tool for encouraging and stimulating innovation, while also ensuring that inventors are compensated for their work.  Unfortunately, the system has been abused by non-practicing entities, entities who own patents but do not create anything with the patent. While litigation is a legitimate course to protect patent ownership rights, the abusive nature that has permeated recent patent cases has necessitated balanced action from Congress." 

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ATR Letter Urges Michigan State Representatives to Oppose Unpopular Internet Tax


Posted by Katie McAuliffe on Monday, September 16th, 2013, 4:28 PM PERMALINK


The Michigan House of Representatives is considering two bills 4202 and 4203 to expand Michigan’s taxation authority into other states. These bills are unlikely to withstand constitutional scrutiny, without the passage of the so-called Marketplace Fairness Act (MFA).  However, the MFA is vastly unpopular with voters nationwide.

Due to the harm House Bills 4202 and 4203 would cause Michiganders and the likely unconstitutionality of the proposed legislation, Americans for Tax Reform sent a letter to members of the Michigan House of Representatives urging them to oppose to House Bills 4202 and 4203.

“The bills would have terrible consequences for the Michigan economy. It forces out-of-state businesses that bring even a small ownership stake into the state to collect taxes. This will provide a powerful incentive for businesses to stay entirely out of state, which means less investment in Michigan,” said Grover Norquist, president of Americans for Tax Reform. “Anything that discourages investment is bad policy for a state that’s had a sluggish economic recovery, still struggling five years after the 2008 crisis.”

The online sales tax bills awaiting a vote in the Michigan House are not just bad policy; they’re probably unconstitutional. In Quill v. North Dakota the Supreme Court ruled that states could not make businesses without a physical presence in their state collect taxes. Interstate tax collection is a responsibility of Congress, not the states.

As stated in ATR’s letter to Michigan legislators, “Poor enforcement of ‘use tax’ law is no justification for constitutionally dubious legislation, especially if its only guarantee is to negatively impact Michiganders.”

Consider if nearby Illinois attempted similar legislation affecting Michigan state businesses. Illinois would try to force Michigan businesses to collect and remit Illinois sales tax, thereby making Michigan businesses subject to the tax laws, court proceedings, audits and liens of Illinois.  Michiganders would have no recourse at the ballot box, and there would be nothing that their home state could do to protect them.  This cuts at the principles of federalism, competition between the states, and due process.

New polling data released by the R Street Institute and the National Taxpayers Union shows that voters are strongly against Internet sales taxes. The Marketplace Fairness Act (MFA) is a losing bet among likely voters; 62 percent of likely primary voters and 57 percent of likely national voters are opposed to the idea.

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Marketplace Fairness Act isn't Winning Any Popularity Contests


Posted by Katie McAuliffe on Thursday, September 12th, 2013, 10:42 AM PERMALINK


New polling data released by the R Street Institute and the National Taxpayers Union show that voters are strongly against Internet sales taxes. The Marketplace Fairness Act (MFA) is a losing bet among likely voters; 62 percent of likely primary voters and 57 percent of likely national voters are opposed to the idea. In fact, opposition rose to a solid 70 percent when survey respondents learned how tax collection would actually take place.

The poll asked respondents:

More specifically, the proposed legislation would allow tax enforcement agents from one state to collect taxes from online retailers based in a different state. For instance, if a customer in New York makes an Internet purchase from an Oregon retailer where there is no sales tax, authorities in New York can force that retailer to collect New York sales tax and send it to New York. Knowing this, do you favor or oppose federal legislation that changes how states collect sales taxes from Internet purchases?

Americans for Tax Reform and Digital Liberty have been providing strong arguments as to why the MFA is terrible for Americans - it is more than raising taxes, it is expanding state tax and regulatory authority.  In May, Americans for Tax Reform sent the senators sponsoring the MFA a letter composed of 16 questions pointing to serious oversights in the legislation, none of which were adequately addressed.

eMainStreet has emphasized the serious business implications not just for small e-retailers or "brick and clicks," but also for manufactures wholesalers and distributors, and have explained numerous times why software is not a panacea.  Additionally, the American Association of Attorney-Certified Public Accountants is publicly opposed to the MFA. Now, NTU and  R Street are providing congressmen and senators with clear cut evidence that the MFA is not legislation that voters support.  We urge elected officials to oppose any incarnation of the Marketplace Fairness Act.

 

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ATR Statement on Net Neutrality


Posted by Katie McAuliffe on Monday, September 9th, 2013, 4:33 PM PERMALINK


Statement from Americans for Tax Reform’s Katie McAuliffe regarding the opening arguments on Net Neutrality:

The thrust of the case will come down to whether the FCC has statutory authority to regulate broadband providers.  Broadband has been defined by the FCC as an information service, not a common carrier (in layman’s terms, telephone service).  As such, the FCC has no authority to regulate broadband.  Today the court rightly appeared skeptical of the FCC’s claims of regulatory authority over broadband via section 706 and market power that would adversely harm competition and consumers.

Statements from the hearing revealed that some judges did not believe that the FCC counsel had sufficiently proven that section 706 provided the FCC with the authority to regulate broadband.  Section 706 is deregulatory and mandates a report on broadband deployment and gives the FCC the ability to remove regulatory barriers to market entry.  This section was not intended to expand the FCC’s jurisdiction beyond common carriers.

Furthermore, the FCC’s argument that Verizon has a level of market power that could adversely affect competition lacked sufficient evidence.  The FCC did not perform a peer-reviewed study of the broadband market to corroborate these claims.

While the outcome certainly cannot be predicted, it appears that the court won’t be easily convinced that the FCC’s attempt to expand its own authority is legally sound.

 

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Obama Administration wants to Impose Cell Phone Tax Hike Without Congressional Vote


Posted by Katie McAuliffe on Thursday, August 15th, 2013, 4:06 PM PERMALINK


The increased tax would go to a government-run project known as the E-Rate program, which was ostensibly designed to connect low-income schools to high-speed Internet. Key facts for taxpayers:

  • The program isn’t working.  Before the administration rushes to throw taxpayer money at another federal program, it should assess how that program is working.  Schools applying for E-Rate subsidies run into a number of barriers that lead to delays in distributing funds and connecting schools.  Because bureaucratic delays in the program persist for up to a decade, students attending a school when the application was first submitted may never benefit from high-speed Internet access.
  • Wasted Taxpayer Funds. Because of the cumbersome process, there is over $5 billion of taxpayer money in the E-Rate account sitting unused
  • Private sector solutions. There are private sector programs connecting low-income households much more efficiently and at no cost to taxpayers. For example, in under two years Comcast’s Internet Essentials program has connected more than 900,000 low-income Americans to low cost high-speed Internet.

 

The Obama administration should focus on making government more efficient instead of tacking on yet another tax onto Americans’ cell phone bills.

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How Can a Small Business Cope with 45 State Audits? They Can't


Posted by Katie McAuliffe on Monday, August 12th, 2013, 3:06 PM PERMALINK


The Marketplace Fairness Act remains a highly flawed piece of legislation whose warts are showing and growing. Things are only going to get worse. The Marketplace Fairness Act (MFA) in terms of audits, software integration costs, and compliance will drastically affect small businesses. Online sellers are usually determined as the target of this legislation, but it affects all remote sales, catalogues, manufacturers, wholesalers, and  distributors.  The ramifications are astounding.
 
“I truly cannot see how our business could possibly handle audits by scores of different states and tax jurisdictions at any one time,” says Rick Smith of Chefsource.com in his Wall Street Journal opinion piece.
 
As Smith says, “Physical location is the key, and any attempt by other states to pass their tax-collection burden on to me is a grave threat to my business.”  Physical location has been working.  States don’t want to pursue the means of collection already on the books because they know it would be more than unpopular, and they want to extend their tax laws and regulations across their borders to people who cannot vote.
 
Not only do people like Smith have concerns on what is in the bill, they also are concerned by what is not addressed in the bill. Smith asks, "how would this new remote auditing power be enforced? Will they come to my office like my local auditor does? Of course not. Will we be compelled to attend audits in different states? This is not addressed in the bill or directly addressed in the states' simplification standards document."
 
"The myth of free software solving everything is especially infuriating to business owners who understand the business processes involved....Every state is allowed to offer its own choice of software. The software might be custom-written by the state, or might be licensed from a tax-software provider. It's not possible to integrate numerous, incompatible "free" solutions into our business. The only solution is to pay a provider."
 
Instead of helping small business and retailers across the country, all the Marketplace Fairness Act does is increase their burden with new complicated regulations. It is yet another solution in search of a problem.
 

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Internet Sales Tax Legislation Hits Manufacturers, Distributors, and Wholesalers


Posted by Katie McAuliffe on Monday, July 29th, 2013, 1:13 PM PERMALINK


A letter from Rick Smith of Synergy Computing has been sent to remote sellers to encourage them take a stand against the Marketplace Fairness Act. The MFA, currently in the House Judiciary Committee, will impact all online retailers that make more than $1 million in remote sales annually. Not only this, but vendors, manufacturers, and distributors who sell to these online sellers will be impacted as well, regardless if they sell direct to consumers:

  • Online retailers and manufacturers already are required to pay sales taxes in the states in which they have physical presence, or nexus. The new bill would require companies to collect sales tax on their behalf even without nexus, resulting in up to 46 state sales tax audits every year.
  • The letter outlines two scenarios of how the law will affect sellers, both equally problematic. General issues for everyone include the substantial time it would take to process these audits and compose monthly reports, as well as the heavy costs of obtaining the proper software and integrating trained personnel.
  • The first scenario addresses manufacturers who sell to retailers and directly to consumers. These manufacturers would be subject to the same compliance and audit burdens as other retailers in every single state that applies. Pro-MFA legislators have even introduced a myth of “free software by the states.” Since every state can pick its own software, this means that a company will have to sign up with a paid service to deal with 45 different versions of tax software.
  • The second scenario addresses true-wholesale manufacturers who do not sell directly to consumers, and instead only serve retailers. Their audit risk jumps up to 4500%. With the MFA, they would be subject to the same audit risks as retailers, and would need to prove that their sales are “properly exempt sales.” Their exemption certificates better be on file—if the MFA is passed, they will be audited.

Digital Liberty encourages you to take action and let Congress, as well as your state and local governments, know how the MFA will do nothing but harm online businesses. Spread the word of the MFA’s headaches and hard costs. This bill has already passed the Senate—we need to make sure the House shuts it down!

Read the letter here.

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Marketplace Fairness Act will Cause Businesses to Fail


Posted by Katie McAuliffe on Tuesday, July 23rd, 2013, 9:29 AM PERMALINK


The cost in time and money of complying with the Marketplace Fairness Act is too burdensome to businesses. SnowsportDeals.com owner Chris Chapman tells his small family business story. Small businesses online are located on Main Street!  Online small business and brick and mortar small business are one in the same.

Click the image below to listen to Chapmans' explain that small businesses online are the same as brick and mortar small businesses:

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Marketplace Fairness Act: "Showrooming" Impact is a Myth


Posted by Katie McAuliffe on Monday, July 22nd, 2013, 9:46 AM PERMALINK


Marketplace Fairness Act supporters claim “showrooming,” the act of trying out a product at a store before buying it online, harms brick-and-mortar businesses. In reality, as Scrapbook.com CEO Drex Davis explains, consumers are more likely to do the opposite.

Click the image below to listen to Davis' explanation of this myth:

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