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States pursue interstate tax program for e-commerce
[February 22, 2006]

States pursue interstate tax program for e-commerce


(Gazette, The (Colorado Springs, CO) (KRT) Via Thomson Dialog NewsEdge) Feb. 22--These are high times for eBay, the e-commerce giant which boasts you can get "it" -- from vintage postcards of The Broadmoor hotel to a $170 million steel megayacht -- in its little corner of cyberspace.



At the start of this month there were 180 million eBay buyers and sellers worldwide with another 60,000 becoming members of the online auction site every day. That's a greater number than the population of Russia.

And the $44.3 billion value of the goods sold on eBay in 2005 would put it 79th among world economies, just ahead of the Congo and North Korea.


It is estimated that nearly 800,000 people earn their living on eBay, either fully or in part. They do this by opening online stores, by serving as selling agents for others -- eBay calls them Trading Assistants -- or by opening brick-and-mortar stores eBay calls Trading Posts.

Anything that gets this big is destined to become a targ-"it," a big, bold symbol of what state governments are missing by not imposing an inter-state tax on e-commerce. Nineteen states -- Colorado is not one of them -- are aggressively pursuing their slice of the pie in Congress through what is called the "Streamlined Sales Tax Project."

The tax would mean that every time an e-Bay shopkeeper -- in Colorado Springs or anywhere -- made an online sale, he would have to charge the prevailing sales-tax rate of the customer's home-state jurisdiction, complete the paperwork and pass the tax money along to the appropriate statehouse.

The eBay community isn't crazy about this.

On the eBay Government Relations page, the San Jose, Calif.-based company is mobilizing forces against what it calls "this major new tax burden on Internet vendors," a project that it says represents streamlining in name only. March 8-10, it will take a large delegation of eBay members to Washington, D.C., to make its case with legislators.

"What concerns all of us," said Stephen Pletka of Colorado Springs' Consider It Sold, an eBay brick-and-mortar store, "is that this state tax proposal could quickly evolve into something much bigger. This is just the beginning of opening the door to other taxes. It could become overwhelming with 7,600 jurisdictions between states, counties and cities.

"The paperwork would strangle us. The burden of it would turn off e-commerce, make it not as advantageous to sell across state borders."

Pletka and partner Jim Reeder will be part of the Colorado delegation to D.C. This is because their eBay Trading Post at 3926 N. Academy Blvd. -- a brick-and- mortar store that does only eBay transactions for customers -- is among the 100 largest eBay sellers in the nation, a company that does about $70,000 in online sales each month.

Pletka and Reeder have lots of local company as eBay sellers. There are 31 other Colorado Springs businesses listed on the eBay Trading Assistant Directory, people who make their living or at least supplement it by helping others sell online. All of them, and all of the hundreds of independent eBay sellers in El Paso County, could feel the stinging impact of an e-commerce tax.

"It would be devastating, mainly in terms of the time commitment," said Timothy Burke, who with his wife, Rita, sells mostly household items online to supplement earnings from Burke Promotions, their advertising firm at 1618 E. Pikes Peak Ave. "If the government made it easy and fast I might consider staying (with eBay). But I've been in business 22 years and I've never known tax (procedures) to be easy and fast. It's always a matter of filling out forms and sending them in. If it came to that, I would probably get out. It wouldn't take the profit margin away because customers would pay it, but the loss of time would not be worth it."

Ed Klingman operates RetroMoto Toys at 738 Manitou Ave. and uses multiple Web sites to market products through eBay. He had developed Web sites for more than a decade before opening his Manitou store three years ago and the Web component was in place from the beginning.

"It was sort of a logical progression," Klingman said, as were his very strong feelings about opposing e-commerce taxes as a simple matter of principle.

"The Internet is really the one place where people can go and build commerce without myriad laws being imposed that help the CPAs," Klingman said. "The system is messed up enough already without something like this. Beyond all that, it's a big tax on time."

Over at Ghillies Fly Shop, 3314 Austin Bluffs Parkway, owner Gary Almeida sells some used fly-fishing gear on eBay for his customers and also uses that platform to liquidate stock that isn't selling well at his 1,500-square-foot store.

Although he concedes that his eBay sales "are only a minor part of what we do," he says the tax would create accounting headaches and make online sales a less attractive option. That is the ultimate concern for a lot of people: that inter-state taxes will diminish opportunities for supplementing incomes or starting new home-based careers. Opportunities that can change lives.

Take, for example, QT's Collection. QT's is an eBay-based business in Colorado Springs that sells items purchased from liquidation sales and also charges 20 percent of the purchase price (plus listing fees) to sell items for clients.

Owner Cindy Kandra started the business three years ago while working as a legal assistant for a downtown law firm. She made the shift to focusing full-time on QT's at the beginning of the year.

The 1,000-square-foot basement of Kandra's home is packed with auction items that she packages and ships herself. She estimates she has 500 items listed on eBay at any given time and sells 700-800 items a month.

Purchasing 400 pieces of clothing from Oshkosh B'Gosh liquidators when the Shops at Briargate store went out of business recently has given sales a boost.

"The money was good if you worked full-time (at the law firm), but this pays as much and it allows me to stay home with my kids," Kandra said. "I named the business QT's for my kids Travis (5) and Quinn (3 1/2). I did this for them. I wanted to be home for them as much as I could be, make sure that when the time came that I'd be home when they got back from school. I totally love it. It gives me the flexibility to do what I want to do."

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