Philly.com | Main Line Sales Tax Software Helps Small Firms Compete

Philly.com | Main Line Sales Tax Software Helps Small Firms Compete

By Joseph N. DiStefano

Congress is still fighting over the Marketplace Fairness Act, which would make it easier for states to collect sales tax from companies that sell to customers across the U.S.

While eBay and some of its member companies keep lobbying against online sales taxes, Amazon “had a 180 degree shift,” Jonathan Barsade, a former corporate lawyer (Akin Gump) who started Exactor seven years ago, told me. “Back in 2005, (Amazon boss Jeff) Bezos was saying they’d never pay any sales tax. But in 2009 New York passed the first ‘Amazon law.’ Amazon went to court and lost…So they put in a delaying game”: The company reached agreements with states like Texas and Pennsylvania to build distribution centers and hire thousands of workers, and in return got “delayed tax implementation” state-by-state. That put pressure on other retailers to follow Amazon’s lead — or look like outlaws. For small merchants it meant new costs.

Barsade believes Amazon’s long-term goal is to use its warehouse network — eastern Pennsylvania and northern Delaware are home to at least 5 Amazon warehouses employing more than 7,000, and the company has similar works in at least 8 other states — to eventually go into the same-day delivery business, replacing Post Office services and competing with UPS and FedEx.

So online sales tax is becoming common and small businesses that ship online are still crying, Unfair! But Barsade says his firm “has mom and pop businesses online with a cost of just a few hundred dollars a year.”

Barsade, who moved up here from Texas to be with his wife, Sigal Barsade, a Wharton organizational-behavior professor, turned from business lawyer to Web entrepreneur “back when the Internet was just a marketing brochure.” He started Great Domains, which sold catchy Web addresses, to Network Solutions, then started Commflash, “the first firm to market full Webpage advertisements,” which he sold to DoubleClick, now part of Google.

Exactor says it’s certified by Streamline Sales Tax, a state revenue department alliance. The firm employs 25 in Wynnewood and Miami, Fla., and, yes, it’s hiring.

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