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Jun 04, 2020

Congressional Testimony on Wayfair: A First-Timer Account

Jamie Yesnowitz, LLMBy Jamie Yesnowitz, LLM


We’ve all seen Congressional hearings on TV, but not many of us have ever been in the proverbial lion’s den. I would like to share with you my personal account of what it was like to testify in front of a Congressional subcommittee on the U.S. Supreme Court’s Wayfair decision and small businesses.

The experience started back in mid-February when I was invited to a meeting on Capitol Hill with several members of the AICPA and counsel to the House Small Business Committee. We were to discuss how states have been handling sales tax issues after the 2018 Wayfair decision. We thought the meeting was to be an informational session, intended to help counsel consider several issues. Following an enlightening discussion on the many issues, counsel asked whether the AICPA would like to have a representative testify in front of a subcommittee addressing tax issues facing small businesses. We left the meeting proud that Congress considered CPAs significant stakeholder on this issue, and we were eager to participate.

U.S. Capitol BuildingA few days later, one of the AICPA attendees at the meeting called to offer me the opportunity to be the AICPA representative at the hearing based on my state and local tax experience and my participation on AICPA’s Tax Executive Committee. I was honored to accept this unique opportunity.

The Economic Growth, Tax and Capital Access Subcommittee of the House Small Business Committee set the hearing date for March 3, 2020. In preparation, the AICPA provided extensive written guidance on the topic to the subcommittee. We began with a brief summary of the Wayfair case and state responses to the Supreme Court ruling. We argued that the state responses were problematic due to a lack of uniformity on the level of economic thresholds, a lack of uniformity in determining how and when economic thresholds apply, and an overly broad expansion of the economic nexus standards beyond the Wayfair fact pattern.

We then addressed issues relevant to small businesses since the Wayfair ruling. We noted the expense of new sales tax compliance obligations, the unnecessary sales tax registration requirements for businesses making exempt or minimally taxable sales, and the special issues faced by small businesses selling directly and through marketplaces.

Finally, we advanced several recommended solutions. We argued for a level of consistency between sales and income tax nexus rules applied by states. To reach a level of consistency, the Multistate Tax Commission’s factor presence nexus standard for business activity taxes was a good starting point for determining economic nexus thresholds. We also addressed the need for consistent and clear definitions for marketplace facilitators. We also requested that effective tax administration be encouraged in a variety of ways: standardized measurement periods for measuring economic thresholds, a 90-day grace period prior to sales tax obligations, and taxability matrices.

While drafting the written statement, the AICPA’s legislative and political affairs director provided a detailed list of questions that the subcommittee might ask me at the hearing. The AICPA team also drafted the 5-minute oral statement that I would present at the hearing. Based on these materials, I was able to prepare and practice for what was to come by participating in several mock question-and-answer sessions, and viewing a recent subcommittee hearing online.

On hearing day, I settled into my seat at the witness desk, introduced myself to the other witnesses (all representatives of small businesses), and familiarized myself with the surroundings. In front of each witness, a digital clock reflected 5:00 in bright red, with a green, yellow, and red light above it, and a “white” talk button to the left, with a flexible microphone attached to the right. I would soon learn that the green light went on at the beginning of the 5 minutes allotted to each speaker, the yellow light represented a 1-minute warning, and the red light flared at zero, reflecting that my time was up.

I stood when subcommittee chair Andy Kim (D-NJ) arrived, along with counsel we had met at the original meeting. After thanking and briefing us with instructions regarding the process – 5-minute opening statements from the leaders of the subcommittee, then 5-minute oral statements from the witnesses, and then questions from the members – we sat, took deep breaths, and prepared to begin.

Kim waited to start the hearing until a few additional members, along with ranking member Kevin Hern (R-OK) arrived. Kim and Hern gave opening statements about how Wayfair has impacted small businesses and how they were searching for ways to assist, along with witness introductions. Once that was complete, I presented my testimony reflecting the AICPA’s positions, finishing with about 25 seconds to spare, yellow light aglow.

The other witnesses followed by presenting their 5 minutes. During the oral testimony, the members that had attended the beginning of the hearing slowly dispersed, and by the time the final witness had finished only Kim and Hern remained. This actually gave all the witnesses a rare opportunity to engage in relatively free-flowing dialog with the members.

Kim and Hern ended up going through three separate rounds of questions each, spreading the questions among all the witnesses. This is where practice truly made a difference. I was ready for a couple of the questions raised based on my practice sessions beforehand. I did my best to reflect the positions endorsed by the AICPA, and was encouraged and supported by having numerous Washington-area state and local tax professionals attend the hearing by my side.

I want to thank Grant Thornton as well for its encouragement to participate in the hearing. We are hopeful that once we move through this uncertain period of crisis, the subcommittee can continue its efforts to reach a potential Congressional response to Wayfair that will protect and assist small businesses.


Jamie Yesnowitz, LLM, is principal, state and local tax, and national tax office leader for Grant Thornton LLP. He can be reached at jamie.yesnowitz@us.gt.com.


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Statements of fact and opinion are the authors’ responsibility alone and do not imply an opinion on the part of PICPA officers or members. The information contained in herein does not constitute accounting, legal, or professional advice. For professional advice, please engage or consult a qualified professional.