NFIB Members Urge A Way Forward After Wayfair

Date: February 26, 2020

Nearly two years later, small businesses are dealing with the consequences of the Supreme Court of the United States’ decision to allow state taxation on out-of-state sellers. As Congress debates how and whether to respond, NFIB members’ voices are being heard.

On March 3, two NFIB members traveled to Washington, D.C. to testify before Congress in a hearing entitled “South Dakota v. Wayfair, Inc.: Online Sales Taxes and their Impact on Main Street.” The hearing focused on the actions small businesses are taking following the Court’s ruling. Before the Wayfair decision, states could only levy sales taxes on companies that had a brick-and-mortar presence within their borders. That physical nexus requirement no longer applies, affecting many more small businesses spread across the United States.

Congress heard from NFIB member Kevin Mahoney, the president and founder of in North Brunswick, New Jersey. With a team of eight full-time employees, Kevin’s company is facing severe challenges post-Wayfair. “Many felt that compliance for small businesses like mine would be made relatively easy,” he said, but “my experience has been anything but easy.” His company is now facing a state audit and years of back taxes that it is unable to calculate, in addition to paying thousands of dollars in compliance costs. Kevin now worries that he will “have to lay off some personnel.”

Brad Scott, NFIB member and the financial director of Halstead Bead, Inc. in Prescott, Arizona, delivered a similar message. Wayfair, he said, “has brought us to our knees.” Complying with the patchwork of state and local tax requirements has cost the family-owned company $183,500, yet they only collected $79,423 in taxes. He said, “we have considered closing because this is simply more than we can handle.”

Denise Rasbid, the owner and founder of Illinois-based CBC Boutique and an NFIB member, submitted written testimony for the record. She wrote that her “financial success was short lived due to the turmoil caused by the” Wayfair ruling. Now “the fear of back taxes constantly loom[s]” over her. She pointed out that “the only way to fix this” is for “Congress to intervene.”

Lawmakers at the hearing were receptive to our members’ concerns. NFIB will continue to provide our members the opportunity to have their voices heard. After Wayfair, the way forward is to ease the burden on small business and provide a foundation for future success.

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