E136: Online Merchants GuildApril 12, 2018 in Ecom-Crew-Podcast
As ecommerce entrepreneurs we are used to doing things on our own, with many of us even starting out as solopreneurs. This isolation, and the ability to control our time as a result, has been very attractive for us for a long time. But more recently this very same disconnectedness can lead to our own ruin.
One of the issues that rattle us to the bones is online sales tax. States have been salivating on the billions of dollars they could get from online sales as ecommerce steadily grew. They went after the online platforms we sell our products on, especially Amazon, but Amazon has proven to be a big gorilla to fight especially with their ability to create thousands of jobs as leverage against states. And so some states turned their attention to the ones they can easily intimidate: us individual sellers.
Amazon claims ownership of most of everything–customers, listings, even prices–but unsurprisingly sales tax is not one of them. It’s up to us to handle sales tax, and everything is so complicated that many of us are not sure what exactly is the right thing to do. Many states even disagree among themselves about sales tax nexus. But still, some sellers have begun receiving letters about this in some states, and it’s definitely not a good position to be in.
This is one of the reasons Online Merchants Guild was born. This nonprofit was created by ecommerce sellers for ecommerce sellers, with the goal to have as many members as possible so that we can collectively fight against issues that are too big for any one of us to fight.
In this episode I talk to Bernie Thompson, an 8-figure seller and member of Online Merchants guild, and Paul Rafelson, a lawyer and law professor working with the likes of GE, Microsoft and Walmart. Below is an overview of what we discussed:
- How Online Merchants Guild was founded
- Sales tax nexus and how complicated it is
- The Wayfair case
- Constitutional principles violated by states with regards to sales tax
- Goal for everyone who joins the organization
- Other goals and member benefits like business insurance, discounted shipping rates, etc
Fighting this issue all by ourselves, like what we are used to doing, is costly and ineffective. We need to stand united and we need more support. We can’t do this by ourselves. There is strength in numbers.
If you want more information about the organization, just head on to its website (it’s still a brand-new site that needs fixing here and there) or send us an email at [email protected] We’d love to discuss it with you.
Thanks for listening! Until next week, happy selling.
Full Audio Transcript
Mike: This is Mike, and welcome to episode number 136 of the EcomCrew Podcast. Today I’m going to be talking about something new called the Online Merchants Guild. And this is something that I have talked about with Bernie and a couple of other sellers for a very long time trying to form some sort of association that is meant for online sellers.
There are some things that are just bigger than any one of us can deal with on an individual basis, mostly government regulations or maybe sticking up for yourself in a group against something like an Amazon or something like that. But the main focus or the reason we started this is just because of the current landscape with sales tax.
And in my position and lots of other sellers’ positions and very smart lawyers’ positions is that having your inventory in Amazon does not create nexus and this is not an issue that we’re trying to take up with Amazon but more with the states. And it’s interesting some states have one position, other states have another. But if you were to get a letter from a state, it’s a pretty tough spot to be in.
And that’s what I’m saying when it comes to having issues that are greater or bigger that any one of us can take care of on an individual basis. And that’s the whole idea behind the Online Merchants Guild. You can go to OnlineMerchantsGuild.org to get to that today, to sign up if you’re interested in that. And I understand if you’re skeptical of it.
A lot of people I’ve talked to are like why would I ever want to do that? If you get it you get it I think is what it comes down to. If you are the kind of person that understands supporting something like this to help fight the greater good in the end of the day, this is a way cheaper way to fight one of these issues and have a team of people on your side that all have the same interest in mind, then not. And not to be the guy that waits to get a letter before you sign up for this.
The whole idea is to be out ahead of the curve. I personally haven’t got a letter. I’ve contributed quite a bit of money to this to get it started both to the formation of it and also start hiring lawyers to fight this. And we’ve already since recording this episode got an Amicus Brief set for the Supreme Court. I will put a link to that in the show notes. It’s already done, a lot of really good things going on.
And our hope is that as we get larger and get more and more sellers signed up that the benefits of something like this can way outweigh the membership fee. So the hope is that again there’s economies of scale or strength in numbers that we can go and negotiate discounts for things like insurance or software and things of that nature. But for the early going here, our focus solely is fighting and working on this tax issue on the state level and also the Supreme Court level.
So I’m definitely excited to get Paul and Bernie involved on this. One last thing I do want to mention, this organization is a 100% nonprofit. Bernier, or Paul or my objective here is never to make money with this, it’s not the idea at all. I think that this is one of these things where I just happened to be at the right place at the right time to make this something that I feel like obligated to be involved in.
I think that as we’ve grown this podcast audience and I’m out there speaking and getting more and more of a following, it seems like this is the right thing to be doing at this time. So I look forward to getting your comments. Again you can go to EcomCrew.com/136 to get to the show notes for this episode. We’d love to hear what you have to think about it. On the other side of this break we’re going to hop right in with Paul and Bernie.
Mike: Hey Bernie, welcome to the EcomCrew Podcast.
Bernie: Hey Mike, I’m glad to be here.
Mike: Definitely and Paul welcome to the EcomCrew Podcast.
Paul: Hey, thanks so much, really great to be on here.
Mike: For sure and this is actually the first time I’ve done a three way interview like this without being in the same room. So hopefully this all goes as smooth as I hope it might, so kind of bear with us everybody. But the reason we wanted to get both Paul and Bernie on the podcast today is to talk about something called the Online Merchants Guild. This is something that the three of us have formed.
We’ve been talking about something like this for a long time. And basically one day it came down to we’ve been talking about this forever and some things in this industry have been heating up. And we just took it upon ourselves to make this the time to do it. So we’ve formed this organization that’s on a nonprofit organization, and we’re going to be talking today specifically about what our mission is and what the organization is going to doing. So Bernie, let’s let you take it first. I mean in 30 seconds I guess just what do you kind of foresee are our mission being here in the short term as we’re kind of getting this thing off the ground?
Bernie: Yeah I’ve been a seller on Amazon since 2009, a fairly large seller. I do a lot of podcasts, a lot of industry engagement. And there’s no doubt that sellers have been put in an awkward position as it relates to several issues but most importantly related to sales tax where we just don’t have the reach that kind of corresponds to some of the burdens that are put on us. So sales tax is one of those tough issues where states are looking for additional sources of revenue, there’s a lot of gray area as it relates to nexus and sales tax laws. And sellers have been put in a tough position and they really need to have a voice that’s kind of bigger than each of us individually.
So there’s a real need for this organization to kind of speak on behalf of sellers. And so my goal here is really to make sure that we kind of live up to that mission of speaking up for sellers kind of collectively especially as it relates to the sales tax issue and eventually to other issues around trade policy and tax policy and regulatory and things like that.
And I’m really excited that we are able to have Paul engage with the organization because Paul is a sales tax expert and a lawyer. And so Paul do you want to kind of introduce yourself?
Paul: Yes. Thanks so much for that, actually it sounds so official. And I guess I have to disclose that under Florida bar license rule I can’t actually refer to myself as an expert. But I teach a class on how to do it for 12 years, a lot of tax delegation, state and local sales tax, income tax. I’ve been an in-house lawyer three huge companies, Microsoft, Wal-Mart, GE, and this issue came down.
I got involved in a series of coincidences, I won’t go into it, but the more I dug into it, the more it just sort of offended my sensibilities that the sort of aggressive tactics that are typically reserved for Google and Apple and those types of companies are now being sort of applied to stay at home business or stay at home business. I just thought that was really just — I don’t know there is no excuse for that.
And so I really want to get involved and help online merchants assert their constitutional rights because guess what, you have them. There are constitutional rights and it protects you from the sales tax and income tax, but the cost of asserting those rights is pretty darn expensive. For a case like that, if it was Microsoft bringing the case, it would be probably a million dollar litigation budget which no one merchant can or should really bear on their own.
So that’s kind of were the reasons why we decided this time to kind of stop talking and really just actually take action because the action is needed more than ever right now so that we can take action on behalf of the entire community.
Mike: Yeah and I think that’s really to kind of solidify that point, I think that as we’re putting this organization together we’re talking about this. And the objective of this organization is to solve problems or challenges for online retailers that are bigger than any one retailer can solve themselves. And it’s one of these situations, there’s a saying even when you’re right, you’re wrong. And that’s I think the situation you’re in when you get into litigation against the state. And I’m fortunate I haven’t received a letter from the state, so this was a very proactive measure on my part to get involved in this organization.
But as a lot of people that are familiar with this podcast, one of my passions these days is helping other people. So even if it doesn’t necessarily directly help me, one of the things that I definitely lose sleep at night over is getting in a battle with the state. And even though I know I’m right, I feel like I’m right, I mean and I talk to someone like Paul here who we can use the word expert but knows his stuff when it comes to tax and is very passionate about the fact that sellers are in the right, that we do not have nexus established in all these states that Amazon has warehouses in, that is a very expensive battle to fight on your own and really just impossible to fight on your own.
And I think that that’s really what this organization is about. And there’s other matters besides tax obviously that fall in that category and will continue to fall in that category over the next few years, but the big one that we’re trying to tackle right now is that tax thing. So let’s just kind of talk about Paul, since you’re the one that has the most expertise in this area, in your opinion I mean what is the foundation for the legal ease here of why we don’t have nexus and why this should be something where we can make some good progress over the next several months to a year?
Paul: Oh gosh that’s definitely — how long is this podcast?
Mike: The Reader’s Digest version.
Paul: Right so it’s just way more complicated than people realize. I mean I think one of my struggles in explaining tax to a lot of Amazon merchants is at least that’s different than what I explained to my students is that when it’s with my students, they come with a clean slate, they know nothing so I can really walk them through the process. But with the Amazon merchants, there’s been such a sort of focus on physical presence and sort of this over simplification of how the law works that I kind of have to first take them out of that realm.
It’s not actually that simple and there’s a lot more gray than you realize. And so that’s kind of my first challenge in that. But if you want to get into some of the issues from a statutory law perspective, I think if you read the law of just about every state I’ve looked at, it’s highly questionable that you would be considered a retailer under state law. So in that case even if you had a nexus, well that’s all well and good, but you’re not the retailer.
So Starbucks might sell its coffee in a Costco, but it’s Costco’s responsibility to collect the tax even though both companies have nexus in the state of Washington, right? We don’t necessarily care about nexus if you’re not the one responsible for it as the retailer under state law. But going beyond that, going beyond the statutory stuff, you get to where the Supreme Court case is right now we’ve got this Wayfair case that’s relates to a lot to what’s going on with us.
There’s actually basic constitutional principles that are being violated here such as do states have an obligation to make it easier for you? I mean it just seems that the only route that they’re going for our merchants is one that’s impossible because when you factor in the sales, actually factor in the income tax and all the other nitty-gritty taxes and all the local taxes in the parishes and before you know it, a home based business on Amazon is going to have like $100,000, $200,000 compliance bill depending where we go in the next couple of months and how things change.
But for most merchants I speak to, that’s it that’s game over, they can’t handle that cost. And so…
Mike: So just real quick there Paul I want to interrupt and ask a question specifically on that, and break this down to bite sized chunks. I mean all of us entrepreneurs have been in business, the states seem to ask us to jump through all kinds of loopholes and do all this different stuff, and why is that specifically onerous and not constitutional, that specific things like I think that we’ve talked about this before. I think it’s super important.
Paul: Yeah. Right and you see the specific thing about it. Yeah so one of the reasons — so in relates to the Supreme Court case, one of the reasons the states are seeking to remove physical presence which is actually unnecessary because they have everything they need to get the taxes they claim they can’t but that’s another story. But one of the reasons why the states are trying to get the court to – or one of their argument for why the court should remove the physical presence standard is that technology is there and they can ease the burden on interstate commerce as they say.
The technology has allowed them to do it, but it’s just not true. I mean the states are basically taking the paper filing requirements and just put them on a website but it’s still a nightmare. All they’ve really done is safe people postage, especially the smaller businesses who don’t have sophisticated SAP systems that might be able to integrate with more advanced expensive tax software.
So for the average home based business, we’re still talking about having to file $100,000 or more of returns and we do have case law out there probably these versus [inaudible 00:13:51] the one that comes to mind if any nerds out there want to look that up about whether or not states can place these crazy burdens on companies when there’s really alternate means to accomplish the same goal. I mean this is 2018, we’ve got one of the best tech companies in the world Amazon, you’re not telling me that the states to work with Amazon to figure out a better way for them to get the money that they’re entitled to other than making a Mom and Pop at home file a 10,000 tax in jurisdictions, that’s insanity.
Mike: They’ve done it in Washington, right, so it can be done.
Paul: It can be done absolutely. The fine about Washington is that there’s still a BNO tax that people don’t realize. And so even that and that’s one of those burdens is one of the many. So that’s what we’re trying to tackle on that side. And then if you want to take it a step further, I don’t mean to go on but there’s also due process question about whether at the due process level there’s actually two types of nexus people don’t — again things you have to explain to people when it comes to nexus is that there’s actually two types. And there’s sort of this minimum connection with the state.
And we have a pretty recent case law there that sort of supports the concept that Amazon merchants don’t have a due process nexus with any state because they’re not specifically targeting the state. I mean Amazon controls where everything goes. You’re not specifically directing your commercial activity towards any one state. And we even have a case where there is consignment inventory in a state and Supreme Court still did not find that person or that company that was in that situation met the due process minimum connections requirement to have a due process nexus which is an interesting case for McIntyre 2011, definitely check it out if you are honored.
Mike: So there’s a case out there with precedents that says basically a consignment which is the relationship that Amazon has kind of asserted themselves and in their opinion to be in doesn’t create nexus?
Paul: Exactly, in any case it doesn’t create a nexus under the lower threshold which is usually the easier threshold to be the due process nexus, and it’s not just about the consignment, it’s more about the activities. Did you as an Amazon FBA merchant, did you direct your activity towards California or did you direct your activity towards the market of United States and through whether it was stored there or put there it wasn’t you, you didn’t choose California, you didn’t choose New Jersey. It’s all within the Amazon’s control as to where the things go.
And so yeah I mean when you look at precedent, you look at generally how we view due process nexus principles going all the way back in terms of [inaudible 00:16:20] nexus, it just seems like it would be a hard one for the states to basically hang their hand on. I think the process level and like I said for the e-commerce clause level because there is a way to make this easy. There’s a million ways that states could have made it easy, but they chose the hardest way possible which is going to put how many hundreds of thousands of people out of business. I mean that’s unacceptable.
Mike: Yeah, it makes perfect sense to me. And it’s always been my position. Amazon controls the customer in every way shape and form. You aren’t allowed to contact the customer in any way or market to them afterwards, they control the inventory. They can even put your products on sale without your permission. But in this one thing where it’s convenient for them, they say that you own the inventory and create a nexus which is a bunch of rubbish in my opinion.
So thank you for the overview from that perspective on the tax side, Paul. I want to take some time and shift, and give Bernie a chance to talk here about just the organization itself, why we formed this. Bernie can you talk just a little bit about the fact that this is a nonprofit, what are our interests as sellers because Paul is a seller himself but the smallest so he brought him on board and went to him for the tax expertise side of it. But talk a little bit about the fact that again it’s a nonprofit and just how we have this thing set up and what our goal is here for everyone that gets involved.
Bernie: So we are trade association which you know is a form of nonprofit, everyone involved and we really hope that a lot of sellers were going to get involved with the organization over time. Everyone involved is really just focused on one thing; it’s helping the small guy. I mean you could hear kind of Paul’s explanation of how messy this is from a law perspective, and how much of a need that there is for somebody to advocate for the small guy here.
Really what’s happened here is at the federal level we don’t have any w kind of engagement or rationalization of these sales tax laws. So the states are just kind of scrambling for revenue and it’s quite technical. I mean you try to explain this stuff to even somebody who’s quite sophisticated and it gets deeper really quick. So we have in the Online Merchants Guild the skills, the expertise to take specific actions to really advocate on behalf of sellers.
But to do that we need an organization and we need financial resources to do that the initial steps. And I think we’ll talk about these are going to be not that expensive. For example Paul mentioned the Wayfair case, Paul is going to be involved with filing on behalf of Amazon sellers an Amicus Brief in that which basically means an explanation of how front of the court filing and explanation of how that affects this big community of the Amazon sellers.
And then there’s additional steps within the legal system that we can basically advocate on behalf of sellers within the laws as they exist today. And then as you stretch it out a little further going down the road maybe a year or two or three, once we’ve worked within the laws as they exist today, there’s just a huge opportunity to work with legislatures around the country in the state level and the federal level to make the laws a heck of a lot better, and make the laws really support e-commerce sufficiently.
E-commerce is the thing which is fundamentally national and some would argue fundamentally global, and a lot of these laws, a lot of these systems were designed before the e-commerce era where there’s an assumption that all commerce is local. There’s a real clash of worlds. And so that makes for a huge need for a unified voice to speak up for kind of what’s right in terms of how taxation and other regulatory issues should work in a world where somebody sitting in their kitchen can sell products globally.
Mike: Yeah, very well said. And I think the whole key of what you said there is there’s strength in numbers and that our goal here is to get thousands or tens of thousands of members to join this, which helps us raise hopefully seven figures in a word chest to be able to discuss and fight these issues on behalf of everyone in the organization. And again like I said earlier, it’s just these are issues that are bigger than any one seller. This is why we took the opportunity to create this nonprofit.
Full disclosure, everything that we do is public knowledge and it started with both Bernie and I contributing five figures ourselves each just to get the organization formed and off the ground and be able to get the organization formed and hire an attorneys to do that, and then Paul involved to be able to fight this on a legal front. And the goal is to just get more and more people in the organization so we can continue to do that.
And then also with the strength in numbers, we see lots of opportunities for benefits for members, things like business insurance or possibly even health care or further down the line or other issues and things that all of us solopreneurs or entrepreneurs have a hard time dealing with. And then we can get discounts on numbers maybe shipping discounts or software discounts and things of that nature. And any money that would be raised in that regard, would be also just again in a nonprofit way.
So it’s different from a marketing perspective because we’re not looking to turn this into something that’s going to generate revenue, but it’s something that can benefit each individual member that’s a part of the group and hopefully tackle some of these issues. States I think feel like they can pick on an individual seller because it’s the 800 pound gorilla coming and knock on your door. We want to turn that conversation in another way and be like, no you’re actually knocking on the door of the Online Merchants Guild, and it’s going to be a little bit more difficult for you to fight this than you thought it was.
Paul: Absolutely. It’s really well said actually and really important and always surprising to me as I learn more and more about the community, and got deeper into it that that didn’t happen before. I mean so many people fit that sort of online merchant description and think that there’s no organization out there sort of fighting for the common interests is shocking. So there’s no better time than the present to start doing something like that.
So, that’s kind of I guess what got us to do it, and I’m really excited about it. I’ve spent a ton of my time preparing. I want to file and make this brief on this Wayfair case that it’s really important in my opinion. I actually think Wayfair is really a case that this is really about us. I mean really in a day our interest I think that it’s very strategic for the states to pick up the Wayfair and Overstock.
You’re not going to feel bad for Wayfair and Overstock because you imagine the state brought the same case against somebody with an at home business obviously would be problematic to probably see the problem. So I think it’s obvious that the states didn’t want to focus on the Amazon and eBay merchant situation and just sort of choose to come at Wayfair that doesn’t want any sympathy.
So it’s up to us now to educate the court and raise their eye brows to what’s going on and I don’t think it stops them because I think after it’s written and filed, I think we start a campaign to get people to start sending letters to the court with a copy, the front page that may just let the court know that the burden is real and that there’s a lot of us paying burdens. Let them feel that burden by doing things like that. So those are programs that I think that an organization like us can use our base to sort of just in every way possible leverage the benefits of having this consolidated power base to get our point across.
Bernie: So Paul the Amicus Brief in the Wayfair case is going to be the first kind of your major practical action that we take as an organization. Can you summarize just kind of what’s at stake with Wayfair where the states are trying to really kind of blow wide open the real previous nexus standards that had been in place now for a few decades?
Paul: Right, so happy to do that. So Wayfair is a case that is going to heard on April 17th tax day for the individual filers. I don’t know if that was coincidental or not that the court chose that day to hear the tax case, but the court tends to not like facts cases, so maybe they found some humor there. Wayfair is basically the culmination of 25 years of Congress not taking action to sort of regulate interstate commerce, or regulate these types of transactions of remote selling.
And being that the last decision on the issue was made at a time when the Internet wasn’t really something that anyone outside of the tech, use of tech worth even thinking about. And so we have this report, it was about the catalog industry. Well it was [inaudible 00:25:38], it was a case about the catalog industries about whether or not — the concern was whether or not the states required catalog companies who simply ship magazines into the state and ship products being a common carrier should be subject to the same burdens that we’re talking about today with respect to the home based business.
So Sharper Image, they were probably worried about Sharper Image in 1992 or Brookstone. And now they need to know that they need to be worried about this broad base of online merchants from all various sizes and industries. So anyway, so the case of Wayfair is basically the case that’s been for the first time put the court in a situation where it’s going to address the physical presence rule and the expectation from a prior case that a couple of years ago said the court is ready to overturn physical presence that they see as being archaic as being sort of a relic of prior forms of commerce are not appropriate for the modern economy.
The problem with that is that it doesn’t really tell the whole story because physical presence is a great — I think it’s still a relevant barrier for small businesses like Amazon merchants. But at the same time, look what the states are doing. I mean for the FBA merchant seller, physical presence is a non-issue.
So, technically this case doesn’t even apply to you. But where it gets worse is that if you’re not an FBA merchant, or if you’re eBay merchant who doesn’t use any type of nationalist, there isn’t — you don’t use that sort of national network of warehouses and logistics, now you’re in the loop. So now soon they’re going to pool those people into the fire that the FBA merchants have been dealing with at least last year or so. So it’s going to expand the – I don’t know what call it, this stand who the states can go after.
And so it’s on us to explain to the states that whether or not there’s physical presence or not, the states are still burdening this industry to death, that they’re not able to control themselves that they’re standing before you and telling you that they can use technology to minimize the burden, but look what they’re doing, look what amnesty was, right? Amnesty was you have 60 days to figure out your back tax liability for the last — was it three months or three years, I can’t remember how far that you had to go back anymore. But and in 25 states and you have 60 days, and it’s like that’s insanity.
I mean if this was a typical state amnesty for a Fortune 500 company category, yeah you’d have six months, you have a year, but 60 days for a small business to kind of just find out that they have to figure it out, they don’t even have the time to consult their accountant. It’s just chaos and that is a burden on interstate commerce. These people make bad decisions. So we really have to make the court aware of that.
So my goal with the Amicus Brief is to courts and to point out these, just to call out to states. I mean to call them out for basically wasting the court’s time on this case because all the money they claim is uncollectible is absolutely collectible today, we see that in Washington, we see that in Pennsylvania. Ebay, Wal-Mart, the case law is out there to assert nexus over these organizations and to get the money; there’s other ways to do it.
So we want to call the court out, we want to call the court out on the states out on the things that they say, the physical presence doesn’t matter because they can minimize the burden using technology. They said they can’t, we will prove they cannot do that. That they need to be there, that they need a physical presence, that they have no other way to get the money.
We can prove that they can do that, and just kind of point out — I have to be careful about this, but I want to point out too that it’s sort of voluntary. I mean there are documents out there, there’s articles right about how states have made deals with Amazon for distribution centers and jobs. And terms of those deals include signing a closing agreement with Amazon that says, we’re not going to tax the marketplace, so we’re not going to require you to collect tax in the marketplace.
I mean these are literally waving their right to be in the marketplace which raises other concerns about is that selective enforcement, have they — are the states the reason why we have the retail apocalypse? I mean have they basically been facilitating a tax advantage? So there’s a lot that we have to raise the court’s attention to. And I’m still working out some of the details and how we want to do that.
But there is a lot that the court needs to know about who we are as a community, how we own Online Merchants Guild as an organization, and what’s at stake for us out of — and with this, the case I was afraid to earlier pike the [inaudible 00:30:13] church in 1970 case involving the need for an Arizona fruit producer to be able say his fruit was produced in Arizona. The rule in Arizona was you had to have your fruit packaged in Arizona in order to get that sticker.
This company, this one single cantaloupe producer had their packaging done in California. So Arizona said they were ineligible for it, for that destination. And the court said — and the only way they could cure it was to build $200,000 packing store in Arizona. The court was very concerned about it. They said that there’s a bouncing here that you can’t just overburden interstate commerce especially when there’s another way to accomplish their local interests of ensuring that the fruit is truly produced in Arizona.
And so that’s one cantaloupe producer, and I’m thinking that that’s amazing that the court went out of their way to protect this one guy or one company. And now there’s a lot of community of how many guys, it is like a million merchants. I mean the numbers are staggering to me how many of us there are.
And so I hope if the court can really learn about who we are and that we’re the real targets of this case, because we represent — but I mean Wayfair’s — the tax that Wayfair would have to collect is a fraction of the collective amount of tax that that they expect us to collect, that they expect to collect from our transactions. So this really is about us, so we need to make the court aware of that.
Bernie: We’re for fighting against the scenario where in order to start an e-commerce business in the United States which millions of us know that you have to deal with 45 or 50 states worth of tax forms, sales tax, income tax. That’s not even the end of it, there’s actually also local city and parish and county taxes. Is that the commerce that we’re that we’re going to be headed towards? And if the Wayfair case goes the wrong way, we’ve actually taken some significant steps in that bad direction.
And the Online Merchants Guild is going to weigh in on behalf of these people who really haven’t had a voice. I mean we’re practical, we’re small and we’re busy, and we just haven’t had to have to kind of weigh in on previous iterations of this debate. And then actually move the ball in the other direction. Like you were saying Paul, really helping the states and the other large entities involved to find the ways to achieve the same ends without burdening interstate commerce and without burdening entrepreneurs here in the United States.
Yeah that’s another kind of important issue here is this is a kind of a uniquely American issue both in terms of — a lot of people don’t realize this, but because of these state tax issues, it’s really the most complex tax system in the world. Europe has a rationalized tax system which is quite complicated, but they’ve actually done some normalization there with the bad laws in Europe. You really can’t find anywhere else in the world that is quite as complicated as this.
And unfortunately because e-commerce is global, if we don’t fix this, if we don’t help the states fix this, the end game here really is that e-commerce companies outside of the United States are going to reach US consumers without complying with any of these laws and the states are going to lose revenue anyway that way. So it’s really important, we’re fighting for the small seller but really in the end we’re actually fighting for a system that works kind of for everybody.
Mike: Yeah well said guys. And just to kind of end things here because we’re already kind of running just a few minutes late. I just want to let everybody know how they can sign up for this. You can go to OnlineMerchantsGuild.com — or sorry dot org. I did the mistake myself there. We actually have a dot com as well and we have the non plural, we got all the different variations just to make sure people can find us. But OnlineMerchantsGuild.org is the best place to get here.
And we have seven different tiers of membership basically starting at $100 for very small sellers to be able to make sure that you can help fight this cause along with us. And we thought long and hard about the different levels of membership here for where we are at. I mean Bernie and I both contributed away more than the numbers that we have here, but the idea basically is for the level that I’m at right now would be $5,000 a year contribution.
And the way that I look at that is that that is a fraction of a fraction of the cost even to respond to one letter from one state if I were to get a letter. And this helps protect hopefully all of our interests as a collective group to fight these issues. And the idea is to end up spending significantly less by fighting this as a whole. Again issues that are way bigger than any one of us can tackle because again there’s strength in numbers.
If we can get thousands of people at these at these higher levels to contribute and do this, we will be able to really push back against all the states in all these different jurisdictions, and not just in these tax issues but other issues. So I think economically this is probably the best money that anyone could ever spend to help defend against their business getting hassled by one of these issues. And we look forward to getting as many people out there that are interested in this involved.
Again it’s a nonprofit. I was thinking about this the other day, I think this is probably the most important thing I’ll ever do in e-commerce. It seems to be more of a calling these days as people know again I love helping people and I’ve been fortunate to this point to not have gotten caught up in this mess myself. But I think that it’s just a matter of time before everyone gets a letter if we aren’t careful and don’t push back on it.
So go to OnlineMerchantsGuild.org today to sign up. We look forward to having you as a member. And Bernie and Paul, thank you guys so much for coming on the podcast today. I look forward to having you guys on again. We can talk about our progress and things that we’re working on. But also we’re going to be out there advocating in any way that we can to get as many people sign up for this. And yeah, we will continue working for everybody. Thanks again Bernie, thanks again Paul.
Paul: Thank you.
Bernie: Thanks Mike.
Mike: And that’s a wrap. I hope you guys enjoyed this episode, getting an introduction to Paul and Bernie. Again you can go to EcomCrew.com/136 to get to the show notes for this episode. Ask us any question you might have, or go to OnlineMerchantsGuild.org. We have the dot com and all the plural and all the other typos just to make sure that there’s never any problem finding us. But the main address is OnlineMerchantsGuild.org. We look forward to hearing from you.
There’s just a plain ClickFunnels site there right now. We are looking forward to getting a much nicer version of the website up. But we’re in the early days where we’re spending all of our money not on website design and other high version things, but trying to get the money towards legal teams, putting the legal team together to get the Amicus Brief through the Supreme Court that we’ve done.
This is going to be a high six figure, almost seven figure project, and we need all of your support to be able to get through the end of this. And hopefully get a positive result for every seller to not have to worry about this issue any longer because it’s pretty clear cut when you hear Paul or other lawyers talk about it. But again to fight that, even if you’re right you’re wrong I say in legal team or legal landscape in the United States because to fight something could cost you hundreds of thousands or a million dollars to fight it.
And then you spend all that money and you’re still kind of wrong even though you’ve won. The judge is like hits the gavel and says, you’re right, I agree with you but they don’t give you your legal fees back. And that’s kind of the thought process here is to get this, get out ahead of this before that becomes a bigger issue. So OnlineMerchantsGuild.org. Thanks again for supporting the EcomCrew Podcast. Until the next one everybody, happy selling, and we’ll talk to you then.
Michael started his first business when he was 18 and is a serial entrepreneur. He got his start in the online world way back in 2004 as an affiliate marketer. From there he grew as an SEO expert and has transitioned into ecommerce, running several sites that bring in a total of 7-figures of revenue each year.