eBay opens the door to online taxes

Free market capitalism makes for a rough battlefield at times, and in the area of online sales the competition can be intense. Now it looks like one of the top sellers, eBay, will seek to go head to head with Amazon in terms of fast delivery for late shoppers as the holidays approach.

eBay has started experimenting with same day delivery following the lead of Amazon and other online retailers. The new service called “eBay Now” had a limited release in San Francisco last week and is currently being rolled out to existing consumers in the local area and is also available through iOS app.

The service will allow customers to sign up for same-day shipping from local merchants in San Francisco for only $5. If this move toward instant fulfillment is successful, it could have implications for other online companies including Wal-Mart, Target, Amazon and other retailers.

On the one hand, this could be a smart move for eBay. Last minute shoppers not only need the products they want – particularly for gifts – but they need them to be on the way to the recipient now. Same day delivery could be a big plus. But it could also require them to set up regional warehousing for products, and that gives them a “physical nexus” in the states where they choose to offer the service.

This could force them to get in line with Amazon in terms of their willingness to pay state sales tax, along the lines of the currently pending Marketplace Fairness Act. Some retailers like Amazon are already subject to state sales tax under existing law for just that reason, and if eBay suddenly has to start paying, it’s doubtful that they’ll want other retailers getting away without doing so, which could find them having a change of heart on the MFA.

Of course, that’s been the position of Amazon since at least 2009.

“We’ve have said all along that we support the streamlined sales tax project which would apply the same standards in all 50 states even-handedly across all retailers,” Smith explained. “We’ve been in support of this as opposed to the state-by-state approach which results sometimes in unconstitutional legislation being enacted.”

The day may be coming. And small businesses have been preparing for it all this year.