EP 3 - Paul Rafelson - Expert Insights about Taxation and eCommerce Laws

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Paul's BIO:

Paul Rafelson is a tax attorney representing online merchants in tax and other business matters. Prior to advising online merchants, Paul spent over 12 years defending Fortune 100 companies in complex state tax litigation matters, spending most of his career as in-house tax counsel for Microsoft, Walmart, and General Electric.  Paul is also an adjunct professor at Pace Law School, where he teaches a state tax based constitutional law course, and he is the acting executive director of the new trade association for online merchants called the OnlineMerchantsGuild.org.


As business owners, we should know how to protect our assets to the best of our interests.

In this episode, Paul Rafelson, a tax attorney and executive director of Online Merchants Guild talk about the legal aspects in running and keeping E-commerce businesses afloat.

Here are more key points in today’s episode:

  • How the modern economy has outpaced the government and state laws

  • Expert insights about taxation and E-commerce laws

  • The revolutionary way Amazon created a portal to the global economy where sellers can compete against giant big-box retailers

  • And how you can join the fight against ignorance in today’s online marketplace and keep the window of opportunity open for everybody to succeed.

So subscribe to the Awesomers podcast and learn the nitty gritty of the legal aspects in running your own E-commerce business.

Welcome to the Awesomers.com podcast. If you love to learn and if you're motivated to expand your mind and heck if you desire to break through those traditional paradigms and find your own version of success, you are in the right place. Awesomers around the world are on a journey to improve their lives and the lives of those around them. We believe in paying it forward and we fundamentally try to live up to the great Zig Ziglar quote where he said, "You can have everything in your life you want if you help enough other people get what they want." It doesn't matter where you came from. It only matters where you're going. My name is Steve Simonson and I hope that you will join me on this Awesomer journey.


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Steve: This is Episode Three of the Awesomers Podcast, you can find show details and show notes by going to awesomers.com/3, again, that is awesomers.com/3 to find the appropriate show links, notes and details that we discussed throughout the program.

Today, our special guest is Paul Rafelson, who is a tax attorney representing online merchants, and tax, and other business matters. Prior to advising online merchants, Paul spent over 12 years defending Fortune 100 companies in complex tax litigation matters, spending most of his career as in house counsel for the likes of Microsoft, Walmart and General Electric. Paul is also an adjunct professor at the Pace Law School where he teaches a state tax based constitutional law course, and he is the acting executive director of the new trade association for online merchants called the Online Merchants Guild. In my opinion, the Online Merchants Guild is a great new resource that will help each of us find legal advocacy and legal strategies as well as lobby through the association where we could combine our efforts. This can work really well and I am super excited about it. Don’t forget to subscribe and share this with a friend. It does not hurt to leave a review as well. We appreciate you guys sharing and getting the word out about the Awesomers Podcast. Thank you very much.

Welcome back to Awesomers, Steve Simonson coming to you again. We have a very special guest, Paul Rafelson and he is a well-known expert in the field of, not particularly tax, or sales tax, but he has been a legal guy for many many years. Welcome to the show, Paul.

Paul: Hey! Thank you so much. I am really glad to be here, thank you for having me.

Steve: Certainly, my pleasure. Paul and I are meeting just after the Supreme Court has just made a decision regarding the 1992 Quill Corp versus North Dakota decision, so, we are going into that in a little bit. Paul, can you tell me about your business today? What you are doing and where you live?

Paul: Sure! So, let us start with the easy question, where do I live. I live in the New York Metro, I live in the beautiful Connecticut suburbs of New York City. Very quaint area, I moved here from Arkansas, after leaving Seattle, as part of my tour of huge companies where I was inhouse, tax councel at Microsoft in Seattle and Walmart that is in Arkansas. And then, this company called General Electric moved me to Connecticut.

Steve: A little fellow?

Paul: Yes, I do not know how much you know about GE, and  they are paying zero taxes. But, they’re soft of like the New York yankees. So, I had to go. But, I grew up, not too far from here, in New Jersey, so, I am still happy to be back in the area. Then GE, one of the last things I was doing with GE is helping them move to Boston. So kind of negotiating the same incentives as Amazon is negotiating now its HQ2. GE was the original HQ2 I guess, in a way. It was a big deal, I was working in Amazon once but I myself choose not go to Boston. I really like where I lived. I really like it here, being in New York Metro. So, that’s that. My business, well I wear two hats. The first hat I wear is I volunteer as the Executive Director of Online Merchants Guild. We are a Trade Association of online sellers, online merchants, sellers who sell online. It can be Amazon, it can be eBay. A lot of times our merchants cross multiple platforms. What we do is we represent your interest in shaping the future of e-Commerce law and policy. Do you remember Mark Zuckerberg when he was on Capitol Hill? Have you ever watched?

Steve: Of course, especially the parody version. When they were lipsyncing. Yeah I saw it.

Paul: You saw the questions that he was being asked by Congress. Really gave you a sense confidence that these people really understand how things work in digital anything.

Steve: Just for the benefits of the audience, the questions were so low level and they showed the ignorance of the people asking the questions. The guy is questioning the witness if you will, were asking questions like How are you gonna make money? He’s like. We sell ads. Yeah yeah. But it’s free so how are you gonna make money? The company is multi-billion dollar profits they just showed absolute ignorance in my opinion, it’s just crazy.

Paul: That’s exactly right. I’m starting to see that as an epidemic in everything e-Commerce, even this court case that we will talk about a little later. But yeah, I mean that’s the point. We have this online merchant skill to basically say listen, people are gonna lobby, people are gonna push policies, they’re gonna push agenda’s and they’re gonna push upon people who had no idea. Our organization needs to exist because we need to give our online merchants voice. We need to get high candidates that actually understand who we are and to push for the right laws that are appropriate for helping our industry grow. That’s what we do. The other side of it is just like any Trade Association will do. We’re ready to take legal action. We want to sue California. We want to sue Washington. To assert your constitutional rights. Because you have constitutional rights even if your in another country, you still have constitutional right as apply to yourselves and this country. But that’s expensive and so when I have clients, personally who are being chased down by California. One of the first thing I’m telling is, this isn’t one of those things were it’s either the Sales Tax Service Provider or the Lawyer. The problem of the lawyers they’re going to tell you not to use the sales tax service provider and should be down the road of litigation. The first thing I tell my guys, - you can’t afford to litigate. I litigate these cases. It’s a million dollar education budget sometimes, and you can’t afford it and nor should one seller really afford it because the case. And at the end of the day it’s the same case for everyone. It should be litigated by the organization of common interest. And that’s pretty normal. When the beverage companies, when Chicago passed the sugar tax on soda all the beverage manufacturers got together and fight it. They hired a law firm and they fought it. That’s what we wanted to do. We want to hire the right law firm, work with the right lawyers. Get our voice heard in court, suing the states, seeking teritorial relief, that’s just like an injunction basically saying stop pursuing the seller. That’s the online merchants goal. We need people to join. The membership sort of varies by your size, everything’s recommended . We have this one membership here, we decided to put $25,000. Nobody’s actually done it. If you’re in a 100 million plus range of seller. We’re not gonna sit here and audit your sales. It’s all suggested, you have that much at stake, then you should be comfortable contributing to this because your gonna gain so much for what were trying to do for you. We’re gonna find a lawsuit for you, that’s gonna save you a lot of money. But, at the end of the day if you give a $100 dollars, that’s fine. That’s what you do. It’s all suggested. In addition to sort of fighting for Tax Policy, IP Policy, Trade Policy, all the things that we want to be there for to sort of shape the government in the future of e-Commerce Law. We also want to focus on benefits. We’re thinking about having insurance products being offered for our members, things they need, getting special discounts with vendors that are appropriate for our community. Like Triple A or ARP benefits. Except of getting 10% off for cellular phone, you’re getting 10% off for something that is actually relevant to your business online. That’s kind of what our benefits focus on. We’re still very much to our intensity. We did file a brief in this case, which  you can find on the Supreme Court website. I wrote it. I’ll talk about it’s influence a bit later. From a personal side, I have a law practice, I have help of lawyers that I work with, and we focus on tax. It’s a big issue, people contact me on time. We’re being contacted by states, don’t know what to do. People who are worried about what to do. If a state contact them whether they register for taxes in certain states. I have an IP lawyer who’s formerly senior IP Council of Microsoft, helps tons of merchant with patents and trademarks. I have mergers and acquisition experts that came of a multibillion dollar deals and certainly know how to make sure that you don’t leave money on the table when negotiating business which I see a lot. Maybe it’s the difference between an asset sale and a stock sale the person who’s driving the deal might tell you the assets deal is better for you but depending on how you’re structured you might actually be better for a stock sale. Things like that. We run that analysis for you. We have experts to do that for you. If you pay tax, we can help you recover what you paid if it wasn’t appropriate. That is my law practice. So people can certainly reach out to me at rafelsonlaw.com if they have questions.

Steve: Just for your benefit Paul and the audience already knows we’re going to have this links in the show notes and make sure we get the loose ends tied up there. Definitely the concept of the online merchants guild are very important especially when you consider the, we all kind of have this common problem right? There are thousands of people being harassed. I am not putting words in Paul’s mouth, everybody should be clear that my own opinions are my own opinions. Paul has got his own opinions.

Paul: …so far.

Steve: Yeah. I think California is operating in a full scale harassment almost mafia like mode of scaring people with these letters, and its happening everyday. Do you see that happening continuously?

Paul: Oh my god! People email me . I had merchants threatened with jail time. I don’t know if you knew about the letter. When California was first reaching out to people I’ve written a letter to the states, to the governor.

Steve: I saw that. Yes, it’s a beautiful letter.

Paul: I told the members, listen guys if you got the letter from California, you feel like you need to response, send my letter. Every auditor has to explain to you about the taxpayer Bill of Rights, the basis for the information that they need. They have to say this information is needed to do xyz. And so we ask them to explain why they needed it. Raising the point that were not even the retailer under California Law. I stand by all of that still. The funny thing was we got this letter back, they sent it all. It was all the merchants who sent it out and advertently somebody from California, forgot to scrub the document and it turned out that Amazon data was inside of the Word document. Basically, what it meant was Amazon wrote this legal response that will eventually become California Legal Ruling and somebody from California copied it from an Amazon document and pasted into the Official California Legal Doc. I could send it to you, it’s hilarious.

Steve: Wow, I definitely love to see it. Just to break it down to the audience, you’re saying ultimately that California response was written by Amazon?

Paul: Yes, it was.

Steve: This is one of those things, this is why the Online Merchant’s Guild is a great way to kind of have everybody show solidarity, Because, whatever you can put in and we should put in what we need to put in because we got to hold people accountable. Amazon on one hand is saying come on to our marketplace, be responsible for taxes. By the way, you have no access to the customer, we don’t know where your inventory is, you can’t control anything but you’re responsible somehow and we’re gonna keep that in place because we have more power than you do at a state level. To me it’s a giant surprise to see that Amazon themselves is, not only did they not file, what do you call it. I call it amicus brief but you have a different pronunciation.

Paul: Amicus. I think because I am a Latin student.

Steve: Okay.  Either way Amicus brief is where a court say, hey this is the way we see it. And Paul wrote a beautiful beautiful brief that anybody should read to understand our perspective. I think even eBay wrote one to say, hey this is not right. Amazon’s siding on the issue and it’s a real shame that Amazon’s helping write kind of legal responses for states to come after guys.

Paul: Especially if there is a direct conflict of interest. Because obviously our point of view is that Amazon is on the hook. Right? If you want your billion dollar lost tax, you better go after Amazon. There’s plenty of evidence to support that in California as well as the law, right? Especially when we consider an FBA transaction where you’re talking about the definition of a sale as transfer of title or possession or both. That’s Amazon in that big context, plus a lot of states - California, Massachusetts come to mind have this discretion clause that says if it makes more sense to have sales tax administered in a certain way then the Commissioner, Director of the States Tax Division has the discretion to do so, they could say, California can say, “Hey listen Amazon we want you to collect the sales tax now because it doesn’t make sense for us if we go after a million seller. That’s what they believe. All of that exist but Amazon lobbying power, the thirty thousand jobs they have in California, the jobs throwing in Massachusetts. I know what Massachusetts’ like when you throw a job there. Like I said, I help GE with the Boston. They’re a lot nicer to you when you bring in stuff into the Boston. So it’s all led to this us versus them being the states and Amazon working together. Because the state signed these deasls as well. Hey were not gonna, were gonna collect tax from Amazon but not on their marketplace and to make sure Amazon has a price advantage. It gets really conspiracy theory-ish after a while. The sellers, the merchant get it cause they’re living it. They understand it. So now it doesn’t sound conspiracy theory-ish, but to outsiders it does sound a little weird because your trying to explain the difference between…you know, what’s a tax break?. From a sales tax perspective, it’s a lot different from a tax break from a property tax. If I put a warehouse in Worcester, Massachusetts and the states me give 20 year property tax abatement. I don’t disagree with that. That’s fair trade. You’re trying to build up an area, to bring some life into it. If you didn’t do it you wouldn't get the property tax anyway. Land isn’t worth very much so why not. But when you actually signed a document and you give somebody a sales tax competitive advantage, in other words you’re saying you don’t have to collect sales tax? That’s not a tax advantage. That’s a price break, that’s a price advantage. Just picking a winner. You’re basically saying we’re gonna let you, because you put jobs, you put warehouses in our state. Were gonna let you sell cheaper than anybody else in our state. When state complain about the level playing field and they complain that they’re losing money to online retailers.  But the number one source of the problem is they enabled it. They could have not signed agreements. But the point is they have the ability to change the law, just as Washington and Pennsylvania did to instantly level the playing field or just reinforce the law just like what South Carolina’s doing. But these states, they didn’t need the supreme court, Washington and Pennsylvania didn’t need the supreme court to fix the problem. But yeah that’s what happened.


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Steve: I love every part of that rant by the way, because I’ve said as much although probably not cohesively but the reality from my perspective is that Washington and Pennsylvania was just a single stroke  of a pen. Hey, this is the marketplace’s problem now. And by the way that makes all the sense in the world. One of the core questions before we dive into the decision. One of the core questions I have always wondered is, besides the obvious of the price advantage and the fact that even before the quill overturned, mostly states are chasing sellers. Amazon must know that the sellers are being harassed. Why did they continue this policy? My big picture reasoning was they don’t want the product liability, they don’t want the kind of end consumer liability. Which will be more than sales tax potentially. Do you agree with that? Do you think it’s just the price advantage? What’s your thoughts?

Paul: Yes. I think the price advantage is definite key. I know a lot of ex-Amazon, and I know a lot of ex-Microsoft people right now and Amazon has never been shy about their goal from last 10 years. It’s always been delay sales tax. Because Bezos himself admitted the benefit, having tax free shopping. It’s a huge draw, and I always look the product as a Macbook. Macbook is always my quintessential example because it’s really expensive. I may not be tax motivated when buying pack of staples. But when I’m buying a Macbook, I am thinking, do I go to B&H here in New York and buy it tax free? Do I go to Amazon and buy it tax free? Because you notice that if you go to Amazon they are not an authorized Apple reseller. They not gonna sell you the Macbook directly it’s going to be through a third party. Your not going to pay sales tax. So when jet.com became an Apple seller, it was funny to me and people are saying why isn’t Amazon? You’re right why isn’t Amazon? Why wouldn’t they be an Apple reseller? Because they don’t want to be. Because that is going to kill their brand. They want people to think Macbook, let’s go to Amazon and get it tax free. That advantage is really important to them. It’s an important step. There’s definitely a percentage of sales that they retain. Because of that. It may not be as much as it used to be. Because the prime, the loyalty is different. We’ve notice that with sellers with prime. It’s that people now actually pay more for products that have a prime logo on it than they would if they just went down on the streets or even in Amazon. It’s a really odd phenomena people are noticing that they can really hike up their prices compared to when they buy things in Walmart, in the average arbitrage space. It’s almost as a prime logo on it. People will buy it. So we’re seeing less of that price sensitivity but it still exist today. There’s certainly a good percentage that does. In retail every percentage is huge, right? I mean the margins are still thin even if it’s like 8% which is what I think jet.com reported when they started collecting tax on everything. That’s still substantial amount of gross sales . So you’re not about to let go of that competitive advantage. As far as the product liability thing, it’s a really timely point. I think that on the one hand there’s no escaping product liability in those situations because we have the sort of concept of strict liability. But that said, Amazon actually a case in Tennessee where the court said that Amazon was just like Craigslist basically. I am sure that the case will survive an appeal if it ever get that far. As the judges reasoning was completely garbage. It’s funny you mention it, to me, the fact that Amazon can escape the strict liability is hilarious. The reason why there were going after Amazon was the seller disappeared, probably selling from China I think and so they had no other recourse but to get to recover from Amazon. But you know in the world of tax, our definitions are very specific. Definitions that will make you retailer for  tax purposes may not make you a retailer for other purposes under the law such as in the context of who’s the seller for product liability purposes. It is all going to be different. Taxes has its own ecosystem and definitions like, a perfect example, what’s a person under the Internal Revenue Code? A corporation is a person. It doesn’t seem to really makes sense, but for tax purposes, it’s a person. That’s how we view it. And one last thing, something to circle back on about Washington… A lot of people has been noticing this now, I’ve said it before. People don’t realize that even though Washington state is collecting your sales tax, they still assert, they still believe that you owe B&O tax which is the business and occupation tax. They’re a sort of quasi income tax because it’s illegal, it’s unconstitutional to have an income tax in Washington right now. Isn’t it unconstitutional? I know they tried. I know Bill Gates Sr tried to impose one but never happened so anyway, the B&O tax is a small percentage of your sales .02% or something like that. On your retail sales because they consider you a retailer that you had to pay not collect to stay to the state of Washington. In order to do that you have to fill out the Washington sales tax return as you would have to fill out normally if you work like watching the states sales tax, and then what you’re supposed to do was to apply credits. So you basically take credits on the form for all the tax that Amazon collected. For the sales tax fees you still have to pay the B&O fees. So in terms of tax liability, as Washington has taken steps to prevent you from having this accumulated tax liability every month that they believe you owe. I don’t believe it. They do. But at the same time the burden is still there. They haven’t alleviated you with the burden which is really what we care about.

Steve: It is a burden. For everybody listening, this is actually important point to make. So a lot of people, especially the people that don’t know what they’re talking about. They will say, hey Steve, you’re harping on this sales tax thing and really it’s just you trying not pay tax. It’s like, no that’s not it. I don’t pay the tax anyway, as a merchant, I collect the tax and remit the tax. That would be a simple thing and relatively close ended. As Paul alluded to, it’s the other thing, its the income tax, the B&O tax. Cities will start sending out in my opinion registration notices and go “Hey, you sold something in Seattle. It’s a fifty dollar year registration welcome to the party. In some cases even little revenue, tax overrides and counties have you know asset taxes and so on and so forth. It will be death by a thousand cuts for regulatory paperwork not just the cost of it all.

Paul: Absolutely the cost I mean you're right the registration fees you know something that I don't stress enough you know. We're in California just to register your LLC I think it's eight hundred.

Steve: Eight hundred dollars or something maybe more now.

Paul: Three hundred is the same thing you have to file through your LLC. If they file personal income tax return now in all these states, it adds up. But then the registration fees that you've to pay the annual to this big Secretary of State you know all that stuff you have to do it adds up. So that I mean you can be creeping into six figures easily based on where Amazon is now and as they expand out their network. Even more states are crazy. I mean it's a crazy sense of you know it's a crazy situation. I agree. No sellar and this is why I had a problem with the eBay position. Ebay had a petition and I was very cautious to say from an OMG perspective we don't support this. Is that we do support tax, that's a misconception. We do support tax. We don't benefit individually from the no tax situation. Amazon benefits collectively right? I mean people seem to think we benefit but if you look to the person who benefits the most it's Amazon. And so we support tax, we just support it we just want it to be easy. Make it easy - either have Amazon collect it or leverage the technology that makes it so easy, painless that you know it's not a problem. Like if you want to have an income tax burden then you know maybe you have a gross receipts tax on Amazon sellers and then give us the option to file our own income tax instead so that way we can either live with the gross receipts tax based on data pulled out of an Amazon API or we file income tax return and substitute it for that. I mean there's ways the states could do this to make it easy. They're just totally, you know again we've got the Zuckerberg level people in charge, and they're also, it's impossible for them to cooperate with each other and I'll give you a quick example of the Zuckerberg level as it applies to our community. Richard Cram is the genius who sort of facilitated the amnesty program that was launched back in August where States falsely accused everybody of tax evasion but then you know thankfully they forgave us.

Steve: Yes good news. Yes, thanks Robin Hood!

Paul: Yes exactly but they didn't tell you about all the back taxes you'd still owe respect to income and all the other problems you have. So when I reached out to Richard very shortly after the thing was launched, you know sort of a little bit naive at the time, just thinking okay this is a case of states really not understanding how Amazon works. You know I come from I used to be a seller coincidentally, my wife used to be in seller operations many years ago so I had like this double way I mean actually knowing a lot about what it's like from the inside and from the outside. Because she was in Amazon and that's how i got involved is through one of her colleagues, former colleagues but so when I reached out to Richard and I started explaining things to him I said Richard what about commingling I said those who coming in their inventory? I said it's almost like the second I send my inventory out to the UPS, I seized ownership at that point because that very physical product that serial number if you will, no longer is guaranteed to go to the person who clicks on my price right? It could come from a completely different place so really I don't own anything tangible at that moment. I have like an IOU from Amazon like some sort of intangible right that if somebody fixed on my price Amazon will be its obligation and give them the thing that I gave them but I don't actually, I'm not storing anything in any one place and you know what he said to me? What's comingling? Yes and that's who's making this decision you know that's who's driving e-commerce right? Again it's just another example of you know having the wrong people in charge and it's like we have this government of people that have no idea how the modern economy works and they're just gonna screw it up. Pardon my language.

Steve: No, no. Frankly, there could be much stronger language deployed here. It is such a multitude of levels of kind of, on the the plus side or the nice side, unawareness or down to pure ignorance. The issue for us as online sellers or merchants, the OMG online merchants guild types of guys, we have to really think about how do we deal with this level of ignorance right because we can't fight city hall and win certainly not on your own and to get big things overturned. It really does make more sense to kind of join together and you know take it to the man so to speak.

Paul: Absolutely and I you know I think we're gonna make a bigger push to get people now that we know the outcome of this case. We know what needs to happen. We're gonna make a big push because reality is like you said it nobody can do it by themselves. People need to join. People really need to get involved now. It's sort of now or never time if they want to have a voice. I don't think people realize there's about 2 million sellers online at least you know I don't realistically think we're going to get close to about 2 million sellers but even if we captured fifty thousand or even twenty-five who knows? We'd be pretty powerful. It's the numbers that make us powerful. It's the number of sellers out there that makes us powerful. If you think about those powerful lobbies of the United States it’s the American Association of Retired people or AARP it's just the sheer numbers then it's just a lot of older people in United States who qualify to be members and they pay their dues and they get their discounts and that gives the AARP its strong voice in what's important to them. There's no reason we sellers can't have a strong voice and can't actually, not only influence legislation but we can influence Amazon. There’s leverage points to be had if we have strong political influence then we can start pushing back on things that Amazon does that makes it harder for us. Because to your point earlier yes, Amazon knows that their sellers are struggling because of this but there's a lot of other things that are happening that are causing Amazon sellers to struggle right? I mean the new FBA fees structure is killing a lot of people, the IP, the constant fake law firm from China sends a false infringement claim to Amazon. Amazon shuts you down, you're down for two weeks, you’re losing tons of money. Meanwhile had Amazon just checked the register.com, the address they’d realized this was a law firm that was just established yesterday, probably not legitimate. But it happens all the time, fatk review gate. I understand that some of it's real but there's people are just getting caught up in big fishing expedition for Amazon in some cases. They just don't know what's going on then to get your issue resolved it’s taking so long because they're just things that Amazon does that we definitely have the ability to push back on but only as a powerful organization. The only way to come at if people join.

Steve: Well this is afoundational element and we'll talk maybe offline about the Empowery e-Commerce cooperative, a non-profit member owned cooperative that has kind of worked on the benefits side of that equation more than the legal and the lobbying side. The reality is these these concepts are all about people being better together. I was at Amazon I don't know a year or two ago and we we had this discussion about, we understand there's a bunch of these bad fish that are in the waters. These guys who, sellers who are making fake reviews and the sellers who are making fake complaints and manipulating other guys in the ecosystem. On one hand we want Amazon to take those guys out of the ocean but not take us out with them and I kept saying you know we’re the dolphins. Quit taking the dolphins out with the net. You're killing us and it's a continuous process. While I respect the complexity of it and understand that sometimes it's probably harder to to tell the difference between good and bad. Some of their algorithmic methods of finding out who's manipulating reviews, I think you're creating a massive amount of false positives. People people who I know for a fact have never engaged in any kind of tomfoolery or skullduggery and they're being treated just like they are one of the worst guys on the planet.

Paul: Absolutely.

Steve:  At the end of the day, maybe it's wishful thinking but I want to believe that you know Amazon wants what's best for the sellers and that they really want the merchants at the end of the day to to feel like they're there some level of customer instead of the outcast that we are today.

Paul: People are very pessimistic right now about the Amazon businesses they feel as if you know almost like Amazon trying to thin the herd a little bit now by making sure, they try to clear out their warehouses or they just follow too much stuff. We don't know what's going on the big picture but it doesn't just a lot of pessimism that I noticed in the marketplace and a lot of people I speak to you know beyond just the tax issue it seemed like tax is just another one of those factors that just kind of is causing people to think twice about becoming the Amazon business which is a shame because listen Amazon in the day, what Prime is and I have plenty of reservations about whether it's appropriate for Amazon to control the whole prime delivery system because of how it was built but I'll save that for another time. The other day what it is, is a portal economy. It's instant scale right? I mean if in 1992 if you wanted to sell a product and sell internationally you have a global product so you'd have to have like so much money right? I mean tens of millions I don't know and how much it would cost in 1992 dollars but you have to set up warehouses in all these countries.  Every piece of the puzzle had to be solved by you individually right and if you wanted to sell products naturally or you can go to Walmart and be in the pitch room which I used to walk by all the time it's very very odd to see watch people pitch. Then squeeze you out of your profits, you know it's not unlike how some people are being treated now. But the point is that with Amazon, in prime, you know eBay really started it right? You now have the ability to sell in a national and international platform but what Amazon did was they introduced the logistics so now you have the ability to sell and scale at the same level in fact better than Walmart, better than Target because you have the best logistics system in the world at your disposal to get your product out there. That's really cool. I always said Amazon created this portal to the global economy where you know for just a few bucks you can go from being like you know to selling in competition with those giant big-box retailers. It's amazing. That's revolutionary.

Steve: It truly is. As much as we want to improve things and critique things the reality is you know it's still a wonderful opportunity. Some guy and his cat can be running a global business. It's got more complex and we're gonna dive now into why it's getting more complex but it's still an opportunity. There's a lot of very positive things about e-commerce in general and certainly the Amazon piece.

Paul: If you have a good product these days, if you're you know or if you're really good at what you do, people still succeed. I think there's some older business models that worked back in the day and people made a lot of money but they were just kind of like you know not working today but I think those who are innovative, those who have great ideas and really kind of understand there's still plenty of success to be had. I mean if you design it you know. The majority of your listeners, would you put them in any one bucket in terms of the type of sellsr? Are they wholesale, are they private label or they you know are they kind of a mix?

Steve: There's definitely a mix up but most of what I advocate in and what I believe in is building your own brand which you know most people would refer to as private label or whatever but I like to see people build brands which builds equity which means that you have something at the end of the day that's worth something.

Paul: Good. I didn't want to come in and start saying other things were the way to go and and then find out that your whole you know audience is dropship. That's good because I agree with you. Brand building is the most profitable way. It's a way to be problem because it's still your own brand. You've created something. If it's unique, if it's novel, if it's something that people want - sometimes it doesn't have to be that unique. Sometimes it's just one change to a product that somebody else made. Somebody else source from it from different factory, making that one change. Maybe it's making the cable longer. I've heard stories but we're just focusing on a very niche product like you know…

Steve: A better spatula.

Paul: Your own better spatula. I always tell people, like people who are in the industry - if you know sales of plumbing supplies and fixtures I said I bet you could come up with some cool stuff then sell it on Amazon because know your trade so well that you could probably mimic what the good things that your suppliers do and and remove the bad and sell it cheaper. I bet you'd make a lot of money except I see I think that's always key to where you come from. What do you know.

Steve: That's a pressing example because I talked to guys in that space, the plumbing and construction space saying exactly the same thing which is bring a cool idea forward and make it B2C friendly. All right let's let's back up for a minute and frame up this problem with the quill decision. We’ll first talk maybe about what was the original quill thought you could probably summarize it pretty easily and then what did the court just undo basically. Can you help us with that?

Paul: Sure. So quill is a continuation of a case called Bella's Hess which was a 1967 case and was the origination of the concept that you need, a business must have a physical presence in the state in order for the state to subjected to taxes the expression we use technically you're collecting sales tax, but to be subject to the tax jurisdiction if you will of a state you had to have a physical presence of some kind in that state. And that case went up in 1992 in Quill because we had another case on transit versus Brady which basically came up with this much more sort of gray conceptual concept of whether if state tax is constitutional. But no bright-line rules. The question in Quill was does the complete auto gray area rule overrule the Quill, the Bella's Hess physical presence bright-line test. The court in quill was probably leaning towards yes it does but it was actually the sort of the states that kind of shot themselves in the foot in that case by sort of indicating that they may try to apply this Court's decision retroactively. They just got the fear that these the states if left to their own devices could really do a lot of harm to the catalog industry catalog industry which is kind of funny because of the way this case when tell you've been worried about accounting industry but not two million people selling online. When the states got a whiff of what this court got hit with and what this day is kind of worth trying to do or you know what could possibly be done, I think they they felt you know better err on the side of caution and just create the physical presence bright-line rule but make it clear to Congress that when they make a decision under what we call the dormant Commerce Clause which is basically saying that Congress hasn't addressed a situation. We basically need to come in and basically act as if we're Congress and and sort of resolve it in a manner that we think would be consistent with Congress's intent but could always be override because Congress could always override it by actually addressing it directly. So we call that sort of the dormant Commerce Clause because you're sort of creating law out of nothing. I don’t want to get the whole negative preemption thing because that's just going to drive people nuts but you're basically kind of invoking the Commerce Clause at the bench as opposed to in Congress because you know the issue is important. It needs to be addressed. So the court the court passes the bright-line rule of physical presence in 1992 and lo and behold, 20 years later sorry less than that. A few years later we start to see the internet and e-commerce and throughout the last 20 years or so states have really been struggling with taxing e-Commerce because of this physical presence rule which they deemed to be archaic and old and inappropriate the modern era. So what they started to do was just start to tap away at it. We saw it mostly in income tax actually. The first chip that digital presence was in a case in 1992 called Jeffrey, it was actually a South Carolina case where there was a tangible company that didn't actually have any physical presence in the state of South Carolina called Jeffrey which represents Jeffrey the giraffe from Toys-R-Us and they would charge a a royalty of fee for using the giraffe to the local stores but basically if the South Carolina store made $100,they would still have to pay $50 to the giraffe company in Delaware. What that meant was the giraffe company would now have $50 of income in Delaware where they don't tax that type of income and the South Carolina company now instead of having 100 dollars of income only has 50 dollars of income. So it's all like gaming within the company and sort of taking advantage of the way States income tax were structured were back then and South Carolina said no wait a minute Jeffrey has an economic Nexus in the state of South Carolina because of deriving income related to the activity. So they kind of coined this economic Nexus concept back in 1992. I mean the court wasn't going to touch that. Then we started to see more and more of these economic Nexus cases; Capital One, MBNA where the credit card debt basically in the presence the cards created Nexus. Eventually we saw the New York case against Amazon which was what we called it click through affiliate Nexus cases right? Now the states were saying, and this was really the first crack of the sales tax case because those were all income taxes but it was sort of seeing a physical presence get withered away. That's when New York kind of went to say, well there's these affiliates operating in the state of New York. They're referring sales back to Amazon and get collecting Commission, they're like your affiliates. We have case law at the Supreme Court that says when you have affiliates operating in the state then they're basically creating Nexus, we call affiliate Nexus. New York won this groundbreaking case that basically started the road, you know pave the way for states to sort of impose their tax laws against Amazon without the traditional sense of physical presence that we thought about, that we know. The other thing about withering away at physical presence, for those who just really want to know. This is probably more detail than you need, the one thing about that always was interesting about the income tax cases is that the state sort of just took this idea that something that was said in the Crow case that basically said physical presence was only a requirement for a sales tax not income tax so that's why they started with the income tax cases and then kind of moves towards the sales tax case. That's sort of the history of how we got there but now still feeling like for whatever reason they decided rather than continuing down the road of affiliate Nexus with Wayfair which they totally could have done and probably would have won because the court never ever took or overturned any attempt by state to use this economic Nexus theory. They chose to sort of pass these unconstitutional laws such as the 200 transaction, a hundred thousand dollars of sales rules. In order to drive a challenge to the court and that was because, I'm sorry, the history…

Steve: No sorry. This is important for people to understand the context of my opinion.

Paul: Yes, this is a 2015 case called direct marketing ebrill and in that case it had to do with Colorado tax disclosure and whether that case could be brought in a federal court because typically federal courts are not allowed to care tax cases but it really wasn't about attacks or the the administration of attacks. It was about notice. So that was the issue there and and the court saw it that way. It wasn't really about the the notice but in that decision what was important was you have Justice Kennedy who delivered the immunity of this case inviting the states to bring a case against Quill and that DMA case before it was at the Supreme Court was actually hurt by Gorsuch who eventually became the judge in the Supreme Court and and also cited with with the jury in this case but Kennedy was sort of said in his concurring opinion in DMA that, hey we need somebody to bring in this case. This physical principle is just stupid and needs to go. Those are my words not his.

Steve: Of course. And then is it considered a normal thing for these justices to kind of Telegraph their opinions? There's a couple written statements and written opinions that that were very blatant saying hey you know that maybe in today's modern world it doesn't apply anymore.


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Paul: It's nature of the dormant Commerce Clause. I mean it's basically the Supreme Court trying to figure out the right answer and in the absence of congressional legislation so they have more leeway to be critical of those types of things. I mean there's a concept of stare decisis but there's also the concept of the list and we're just trying to come up with an answer in lieu of this really should be Congress's problem not our problem. But because it's our problem we're just trying to come up with the right answer. The answer we chose we now see is being pretty dumb in the modern economy and I think the court in this case and we'll get into a little more was pissed off there. I think there was probably intent for what president was meant to do but it was never meant for to shelter a giant company like Wayfair from collecting sales tax especially with their massive virtual presence and all that. I think from the course perspective this case is really about preventing companies like Wayfair from an overstock from sort of using this as a shelter to gain a price advantage but limited in many ways to that situation and still being open to other scenarios where it still could be unconstitutional. What they basically did is remove physical presence from the analysis. That South Dakota law they blessed it but it still remanded back to the lower courts and you know technically could be deemed unconstitutional by the lower courts if they wanted to. But the court’s blessed it so you know it's probably going to be fine. It would probably be heart. I doubt it will be remanded. I've never seen the court to be that blunt and I was a little disappointed too in the way that this came down especially Ginsburg. I thought was really problematic. I was really disappointed.

Steve: Yes it was the tea leaves were definitely reading towards, it's one thing to say hey the multi-billion dollar companies are using this to their advantage and it's a whole another thing to go there are hundreds and hundreds of thousands perhaps millions of merchants you know across the US and it really across the world who will be impacted by these things. In my my reading of the the case, South Dakota was quite disingenuous with their idea that hey it's nineteen bucks a month and you're done. No, not done. Not 19 bucks a month. This is gonna be a massive massive compliance regulatory burden. The money is irrelevant from the standpoint of collecting and remitting taxes and even our money is merchants anyway. It's the consumers money so that's not the issue. So if you summarize the decision now basically or I'll try it and then you agree with me or clarify but they basically said physical presence is no longer the core question. Something as simple as 200 sales in a state, 200 sales you can sell you know a $1 item 200 times and you'll be now required to deal with taxes or $100,000 whichever comes first is that basically how you saw?

Paul: I think they sort of ran the scenario where they set a hundred thousand dollars of sales or 200 transaction seems like you must have substantial activity in the state to generate that at all again. They don't really understand what it's like to be on Amazon but at the same time there's a lot about Amazon that's different in this case right? I thought what was telling to me and I think you know the court still left the door open I mean they didn't say it was the definite, this is definitely okay. They said it was definitely okay in the context of large companies and may be okay with small businesses but to challenge this law to say it's too burdensome as a small business they said the door is still open to do that. This is not what they were asked to address. They were very very narrow and what they decided and basically just saying we're removing physical presence from the equation. You can still bring a burden case before us and say listen I'm a small business I'm a kitchen table enterprise here and now I've got to hire Deloitte  to do my taxes on my kitchen table then nowhere else to put them. It's kind of ridiculous. I mean really where is a small business going to get an accountant that you know how is your Washington state local accountant going to understand the intricacies of Mississippi laws applied to my income tax LLC that's a pastor or the difference between their their income, that portion of their tax return or income and their franchise tax which is like a net worth tax? There's like different scenarios and I don't know if your Washington state accountant gonna know that so who will you go to? But I thought this was interesting in page 23 when the court said that this quantity of business referring to the hundred thousand $200 transaction rule could not have occurred unless the seller availed itself of substantial privilege of carrying business in South Dakota and respondents are large natural companies a undoubtedly maintain an extensive virtual presence. I thought that was really key that they added that sentence there I didn't have to but I think that was seriously like the point. This is ridiculous. Stop hiding behind this and it makes sense because if you listen to the oral argument they could care less about Wayfair. They were always concerned about the small business and I think what they said is well listen, the case that was brought and this was my argument is that this was really never about Wayfair. The case that was brought before us technically is Wayfair and we think the idea of Wayfair hiding my physical presence is really ridiculous. We need to get rid of this ridiculous rules so Wayfair can't just hide their presence and neither can other big companies. But if a small business is truly being burdened by these laws then by all means bring that case before the courts and if it makes it to the Supreme Court though you know maybe they'll take it and and if they believe that there's something to adjust there but I think part of it was they just removed it let's see what happens maybe that will inspire Congress to take action because obviously putting it there didn't inspire them. So maybe this is another way to get Congress to take action, to clarify not that, that gives me any comfort.

Steve: Well even as the quill decision came down as I recall the court said unequivocally, hey this shouldn't be our problem. This should be Congress's problem. You can fix all of this immediately. Pass some laws that deal with this and it's just sat there the entire time.

Paul: That's exactly right and that's what the dormant Commerce Clause is. It's like we're gonna speak but please Congress come in and address this. This is kind of really not our place to do this because we're not supposed to legislate.

Steve: Now we've got the guys questioning Zuckerberg to try to sort this out and explaining to comingling, FBA and it seems like an uphill battle.

Paul: Lobbyists convincing these people that there are merely this passive flea market online and that you guys are all individual retailers. That's why OMG needs to exist, it needs to be a free of Amazon, free of eBay. We can't rely on the same e-Commerce coalition that would include in Amazon or include in eBay and that's why our membership requirements really exclude those types of companies. We were very specific what you have to be in order to be a member. You can sell on eBay, you can sell on Shopify, you can sell anything you want online. Who knows one day maybe an Airbnb person I don't know. But the point is he can't be the big guy because that's problematic. We can't have those types of people driving policy because they're in direct conflict of interest. We need to have our own voice and our own opinion and be able to get that voice heard and make sure people want to hear what we say and that that only happens if people adopt OMG and become members and really you know get into it.

Steve: So what does this mean then for merchants out there that it's like okay now physical presence is not the deal. So does that mean I need to register in 45 states or you know should I just capitulate when California sends me the the tenth nasty gram that says they're taking my kids and my pets? What does this mean?

Paul: It's funny because somebody told me they said Avalar. I knew Avalar gone public a couple weeks ago and that their stock went up 15% after this ruling.

Steve: That was the one we could've saw coming.

Paul: I forgot to even think about that. I mean it's ridiculous because these companies are gonna go on and scare everybody and say you need to register now and get compliant at 50 states. Oftentimes people who talk to me say they didn't even get

warned about it. I know they had articles and income tax in the past but they don't really warn the people when they get kind of sucked into it that that's coming. So people get surprised. All this sort of subsequent pain that comes with registering in these states so I'm against registering and I just think that you're opening yourself up to more pain that you know most sellers I talked to can afford. They realize I can't afford all this compliance. I can't afford to hire a new tax guy full-time and again there's still a lot of questions that have to be answered and that's why we need to bring our case in court. The case that says this is a burden on small businesses. This shouldn't be the burden of kitchen-table enterprise right? We have a solution. We have Amazon collecting the tax is a much more reasonable solution to this than making each individual small business marketplace merchants collect the tax so the burden doesn't make sense in this case because as applied to us there's a much more reasonable solution that would place no burden on us so why have Amazon charge for it. They already do you know and they can be compensated for the effort that they have to go to do it for us but it's just not really fair that we have to be put in a situation. Then we also have to address the income tax in the same case and say okay well Amazon can do our sales tax but they can't do our income tax so what do we do about that? And do the states need to get together and just come up with an easy solution for people who sell via marketplaces. Something needs to be done you know it's not our fault the states or dysfunctional it can't work together and can form a common solution. We shouldn't be forced to suffer. You know as I said in the brief it's like you know the states were never going to adapt to innovation. We expect innovation to sort of adapt to us. You know they're you absorb us as a burden. We don't we don't try to kind of help further innovation by sort of adapting to the modern times. I mean the states have done nothing since Quill if you think about it really. They've all that stuff the court said. It's all crap to me because the states have really done nothing. The state's definition of modernization is the fact that you now file on a website as opposed to filling out a paper return but it's like scanning the Encyclopedia Britannica or the paper books putting them on an Adobe thing and posting the web and saying I have electric and digitized an encyclopedia. It's such bullshit. Sorry for my language.

Steve: No, it's quite appropriate. The reality is they have done almost nothing. In fact it may be less than nothing. The states don't have any intent in my opinion, I don't see any intent of them trying to work together to solve the problem in a productive way and this goes back to the fact that there's so many hands in the cookie jar right? Because it's not just the states right? There's every little cities. Now how do I get my little piece of that? Tampe Arizona says hey I need a registration fee. Wou sold a spatula in my city so I'm gonna need a $50.00 a year registration. The consequence are potentially unending so there's just a lot to be done. When you look at this - maybe we should just clarify the question of FBA creating Nexus is still separate from this?

Paul: That's actually a point that I always make. I mean it's funny how many FBA people come up to me and say you know do I need to register now? It's like whoa why you're not in any different situation. You're still in dire straits. You were in dire straits before this case because the states in their opinion thought you had a physical presence so even if the court went the other way instead physical presence was no longer a factor the states were still going to consider you to have already had physical presence prior to that and you were already on the hook you're already in the state. So for the FBA sellers I mean nothing's really changed other than you know the urgency that was there before it's just become large and because now we know that we need to take action because the states are gonna be empowered to act. They're going to be more and more aggressive so we need to get people on to OMG and we need to start the process of fighting certain constitutional rights. At the same time you need to start protecting yourself and buying yourself time making sure you don't screw up something where you end up having to pay a bunch of tax and the only way you get it back is to pay it and then you have to sue for a refund and you're already in a bad spot. You know though you have to be mindful of that if you're being if you're being pursued by a state that there are you know ways to protect yourself but you may not necessarily just want to start cooperating you know directly either. It's time to take action if you're an FBA because now we know. Now we know what's what needs to be done. If you're not FBA welcome to the party as you said before. You're now in the situation where a lot of us are except non-FBA people and non-eBay people and may not have the income tax problem because they do have this law called public law which says you don't have to file income tax even though states can make you pay your tax returns in that state if your only connection to the state is the sale of tangible personal property and you're selling it but they're or honor orders are referred to home office out of state and then shipped in States so somewhere in that sort of threshold of what you can do to avoid income tax. I don't see FBA sellers is crossing that threshold I mean non FBA sorry. Non-FBA sellers crossing a threshold so you still may have a very expensive sales tax and tax registration compliance burden you know maybe it's 20, 30, 40, $50,000 who the hell knows what it's going to ultimately cost you when you factor in all the cities and states and towns and parishes but you may not have that in context bird unless the states start to get creative with you but where is the FBA sellers? Because in the eyes of the states you have a physical presence. They're going to say you're storing inventory in their state and therefore you're subject to income tax

Steve: And of course this entire argument needs to be addressed at some point maybe this is something that the online merchants guild will look at but there's many reasons in my opinion that FBA still is not physical presence. It wasn't before.

Paul: Absolutely

Steve: But this is my interpretation again. Paul has his own opinions and expertise and actually he said as much the states are now gonna be empowered. They are gonna go hey now that the gloves are off we can do anything we want and nobody can stop us. And I don't think that they will read the narrow kind of this is about the big company's picture and so this is inevitable that there will be lots of state action against lots of people. You know we need to kind of gird ourselves for battle and set strategies and then ultimately figure out what what kind of case we can get in front of to fight this thing because California I think they're gonna turn up the heat not turn it down.

Paul: Absolutely I mean the people who are sending you threatening letters, they’re not even qualified in what they do. There’s this person who's been harassing a lot of people, she just keeps turning it up and scaring me more and more. She was like a travel agent six months ago. If they don't have LinkedIn profile, their Facebook or like they don't know tax background. I've spoken to a few those people they're just like robots. I mean they have a mission. They're told what they're supposed to do and following orders. They're not doing, they don't even understand the concept that there's legal question and legal opinion that. This is not black and white. They see it as pure black and white. They think you're all tax evaders. It's just insane and so they scare the crap out of people and get them to do things that they probably shouldn't be doing or sending it back. There's a lot of problems with that. That form,  I mean you might respond to it but we're not going to fill it out answer those questions in that way. That's ridiculous.

Steve: Their intent is just to get you into the system. It doesn't even matter what you put on the form. They're gonna decide that…

Paul: I know what you’re saying. They've already concluded you are next as the form is just to kind of like make let you make admissions.

Steve: This is exactly right. In fact I know one of my very good friends and colleagues, he's been harassed by them he's been on the phone with them and at one point he's like fine I'm gonna send you what you want. And then he sees these questions he's like well the answer to this is no but they're whatever I'm not sure I get the details right. But their system wouldn't take the actual correct answer. And so he's like well what should I put here because it's not taking the correct answer and he's like well just put in yes. You know essentially admitting things that aren't true. This is these people advising him to lie on a government form. It's just a crazy blind leading the blind scenario.

Paul: I taught a lot people through these and I think they're very surprised when we run through their business, when we run through analysis and decide what we want to do are they're very surprised just trying to find out. Everyone situation’s a little different but it's not the approach… One thing I'll say is there's no brownie points here. You don't get extra credit for cooperation. This is not law and order where they come up to you and say you know what you can go get a lawyer or you can work together on this. They're gonna screw you no matter what. It doesn't matter if you’re cooperative. Some of my clients have been super cooperative in fact it helped the states understand the business to the point where they further support their position that this is a legitimate what they're doing and then they go even harder on that person. It's like it's hilarious. It’s Washington right now. It's such a bad situation. You can defend yourself, you can go against California based the the back taxes or you can support the OMG and help us reach our goal it's not going to achieve it's gonna be hundreds of thousands of dollars hiring the kind of litigators we need. This is going to be hire lawyers and litigators to file these types of cases, these are complex cases. We need to raise that kind of money to bring that case but what if you're facing that legal bill on your own. Don't you much rather share with like tens of thousands of other people? We should be joining. We should be encouraging other people to join. I love the fact that you support us. I wish other people who who are thought leaders and whatnot in the Amazon community would support us so many so many feel threatened by us it's very it's very annoying. So many people to reach out to just seemed like seem to treat us like we're some threat to their business when we're actually trying to save you guys. We're trying to save. Do you want to be a Myspace guru in a year when nobody can afford to do what you're doing or do you want to continue to be able to offer your services and help people succeed? Our job I can't tell your listeners how to succeed on Amazon. I don't know how to tell you but that's not what we're here to do. We're just here to kind of keep that window of opportunity open for everybody to succeed right? That's what we do and so that when you learn what you need to learn and you can apply it that you actually can do it.

Steve: In some ways this is just the maturity of the market. If we boil the fat off the bone the Amazon Marketplace really picked up steam in the last you know say four to six years in terms of you know bringing in so many sellers and having so many people starting to achieve you know real meaningful numbers and that's a very nascent you know part of this the e-commerce business. The idea of the Empowery cooperative people are still are confused about how can members only cooperative and what does that mean and and you know people are confused about why would you need a trade association to help lobby and help fight legal battles? It's a fairly unique thing whereas other industries, it's a known quantity you talk about AARP. But any major trade business I've ever been in construction they have lobbying organizations, association.

Paul: The association of cheese manufacturers.

Steve: Exactly.

Paul: Even ridiculous ones. There's no reason why two million people with such a common interest. It's actually shocking to me.

Steve: It is, yes. Quite right. Well but again this is from the  kind of older experienced guys looking at a nascent business going. You guys are missing one of the basic elements and you know I'm here to share with all the Awesomers out there and Paul is kind enough to come on and share as well to say hey you know this is a solvable problem. There's gonna be pain along the way no doubt about that. But by supporting you know OMG and there's also a marketing company called OMG so I'll probably usually say online merchants guild. We’ll have this stuff in the show notes as well as how to be able to contact Paul directly. These things are things that you know when you're being threatened by a state you know you should take action on some level and at least know what the options are and then make an educated choice from there any any final words of wisdom Paul? Because I know we've ran a little long but it is such an important and complex topic. We probably haven't given enough energy just yet.

Paul: It's a hard thing.I  prefer the opportunities where I can speak on it because it's a little bit easier to get it all out because you know there's just so many moving parts in this in this stuff. A lot of times you know where I struggle with this as you know as a corporate tax lawyer when I when we talk at tax issues with big companies we're talking to tax professionals right? One tax prep. So there's already a sort of common ground that we have so I don't have to explain everything from scratch whereas in this case I have to explain things from scratch but they actually have to do more because I have to help people unlearn what they've been taught by tax jars in Avalara and that this physical presence equals Nexus and therefore you're screwed mindset. Because that's not true. I always start off as saying well you know prior to yesterday that you know did you know that there's two types of Nexus; that there's Nexus under the due process  cause and there's Nexus under the commerce clause. We still don't know if you had next to something of the commerce clause because of FBA. I would suggest you don't. You didn't direct your activity towards the state blah blah blah blah blah but it's like they don't even know that and that sometimes the wake-up call is saying guys stop relying on what you think you know and just let's start from scratch here. It's hard to do that so I always tend to be over the you know it's more than maybe it seems as necessary maybe too much because I just don't know where the listeners are coming from. Saying last words, if you're dealing with a state right now definitely get help from people who tell you that you have a chance. Obviously I do that. People would just say you're doomed and you have to pay. Probably try to get you on a payment plan to earn their money and leave. Realize that when a state tells you they want you to come in to comply especially California they oftentimes leave the fact that they're going to come after you for back taxes. If you ask them they usually do tell you but a lot of people don't own and then they get the letters say okay where were your back taxes for 10 years? So just realize that that's on the table too. If you have any questions obviously reach out to me but most importantly join the guild and beyond just join the guild and we need help. I mean a young organization. We just launched in March, a sort of a rush to launch because we needed to have you up the running for that but help us spread the gospel. If you have friends who are in selling get them on board. Tell them to tell their friends. Let's just get this thing up and running. Get people to adopt it. Because if you don't, if we fail in our mission then I just don't know what happens next to this community. I mean there's nobody  looking out so you know help us spread the word and if there's anything you can help us with like I don't know time to help us with our social media marketing, we love volunteers but anything anyone can do please reach out to me [email protected] and you know happy to love to have you on board.

Steve: Excellent you know advice and and certainly sage wisdom. These are very important topics I haven't said it clear enough here but I want to just reinforce this. For as long as I've been able to track him a year year and a half I don't know but a long time he has been an advocate for the entrepreneur, he's been an advocate for the little guy without coming to each guy and going hey I'm not gonna speak the truth unless I have some skin in the game. He's doing a lot of this stuff on a volunteer basis now. That's not sustainable we got to have a way whether it's the online merchants guild or using Paul's firm directly to be able to take action and keep this kind of you know brain plugged into the system and so I really appreciate everything you've done for entrepreneurs up until now and I know that there will be a lot of support coming and there's no doubt that there's ways that we can kind of increase this lobbying and lawsuit part of the equation. I have some ideas and we'll talk about those offline. But a very good job and thank you for such amazing work on behalf of entrepreneurs around the world.

Paul:  You bet. Thank you so much. I love these opportunities. so it's great to meet new people and and get involved with your group sometimes. Talk about what's important. I appreciate it. thank you for thinking of me and for all your kind words.

Steve: Absolutely Awesomers, we'll be back right after this.


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Steve: Well I sure enjoyed our conversation with Paul today I hope you did as well. This is again the Awesomers podcast number three. You can go to Awesomers.com/3 to see the show notes and related details that we may have talked about. I is just so striking to me that you know the states are acting in such a malicious, harassing and from our perspective meaning myself and others here at Awesomers, not speaking for Paul, but they're acting in the illegal way. They are going out of their way to oppress small businesses particularly those that are not even in their own state and they're doing so in a way that anybody else who acted like this would go absolutely to jail. They are doing everything possible they can do to harass, oppress threatened and otherwise push ecommerce guys into either the shadows or into some sort of fake compliance that is not even sustainable or even pushing them out of business. So let's not stand for this. Let's do something about it. One of the ways you can do that is to go ahead and share this podcast and don't forget to leave a review and maybe share this with a friend doesn't hurt. Sharing is caring.

Well we've done it again everybody. We have another episode of the Awesomers podcast ready for the world. Thank you for joining us and we hope that you've enjoyed our program today. Now is a good time to take a moment to subscribe like and share this podcast. Heck you can even leave a review if you want it.  Awesomers around you will appreciate your help. It's only with your participation and sharing that we'll be able to achieve our goals. Our success is literally in your hands. Thank you again for joining us. We are at your service. Find out more about me, Steve Simonson, our guest, team and all the other Awesomers involved at Awesomers.com. Thank you again.