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Online bike retailer responds to state sales tax debate

Published October 7, 2014
The owner of The Pro's Closet says the Internet Sales Tax Bill is unfair to small businesses.

Editor's note: This article was written by Nick Martin, a retired pro mountain bike racer turned entrepreneur and founder of The Pro's Closet, based in Boulder, Colorado. The Pro's Closet is eBay's largest cycling store. TPC's management prides itself on providing the same level of customer service you would expect from a  local shop, only online and in the used marketplace.  

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This article is in response to a column by NBDA executive director Fred Clements, published here last month.

Nine years ago I started The Pro’s Closet (TPC), a small business that wouldn’t have been possible without the Internet.  Today TPC has grown into the largest used cycling store on eBay.  TPC operates entirely online to resell high quality used bicycles, components and accessories.  We use the Internet to enable our business to reach consumers across the country and around the world.

Yet there is an Internet sales tax bill currently before Congress that would limit my dreams for growing my company and would negatively impact the livelihoods of so many small business owners like me. Ironically named the “Marketplace Fairness Act,” this bill would subject small businesses to legal liabilities, make it impossible for us to compete with large retailers, and in turn, kill the jobs that we create in our local communities.

Today, we are responsible for collecting sales tax from our customers in Colorado, which makes sense because that’s where our warehouses are located. However, the proposed bill would require us to collect and remit sales tax on behalf of every state where we make a sale – a completely unfair expectation.

TPC maintains a staff of 30 employees.  Unlike large national retailers, small businesses like mine (and almost every other brick and mortar shop) simply do not have the staff or technology in place to abide by this bill and still effectively compete. If a new law is imposed, large companies have the staff in place to address the issue. If new technologies are needed to meet revised tax mandates, these companies have robust technology departments available to handle the integration. Most small businesses do not have these resources.

The current bill exempts retailers with under $1 million in sales, yet this threshold is unrealistically low and fails to account for the majority of small businesses. My business is above this arbitrary level, but I am far from being a large corporation.  In fact my business would have been above that threshold in its first year of business. I strongly believe this legislation must be revised so that it exempts small businesses like mine.

Proponents of the bill often claim that there is software available that would make it easy for us to follow these proposed tax requirements. This claim is simply untrue – collecting sales tax requires so much more a few simple clicks of the mouse. Take for example my own tax experiences. With the help of my accountant, collecting and remitting in sales tax for Colorado alone is still a daunting task.  Last year, it took me multiple days to complete the process. There are frequently technical issues and problems that make the experience even more complicated and drawn out. Could you imagine the time it would take for me to do this for thousands of additional jurisdictions?

If you look around at most of the bike shops in the U.S., you will see that the most successful shops are utilizing the internet to supplement their brick and mortar storefront.   Companies like Smart eTailing are providing shops with the ability to take advantage of the Internet and utilize software to reach more customers.  We cannot sit back and deny the fact that our customers are evolving and their expectations are changing.  We need to evolve with our customers or we will be left behind.  Today, customers expect inventory to be available to them online.  If we support this bill, shops will not be able to grow and large players like Amazon will be servicing our online customers.  Additionally, we will not be able to give our customer’s what they want or provide any form of online service that would potentially reach a customer outside of confines of our shop walls.

At TPC, we are proud of how we have been able to use Internet to create jobs, contribute to our local community and provide cyclists everywhere with a greater selection of bicycles and gear. Small businesses are the backbone of our country and we should continue to empower them by including a robust exemption in any Internet sales tax bill. Let’s continue to enable small businesses like mine to contribute to our local communities and national economy for years to come.  As an industry, we need to realize that the Internet is not going away, our customers are evolving and by supporting this bill we will be giving the large corporations more leverage and we will be setting ourselves up to be left behind.

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