Small Business Takes Center Stage in Internet Sales Tax Debate

Lawmakers both in favor and opposed to the Marketplace Fairness Act are repeatedly leveraging one phrase in the debate over an Internet sales tax: small business.

The fairness act easily passed the Senate in a 69-27 vote Monday but faces a tougher battle in the House. On Tuesday, House Speaker John Boehner told Bloomberg TV that he "probably" won't support the legislation, which he said puts "a big burden on some very small businesses."

One small business owner said he hopes the Republican-controlled House wins the battle to prevent the Marketplace Fairness Act from becoming law.

"I file eight or nine tax forms every year, and I'm a 10-person business," said Gene Marks, president of The Marks Group, a consulting firm based outside Philadelphia. "Small business is already buried in tax paperwork. It's brutal."

The Marketplace Fairness Act would allow states to require that out-of-state retailers collect online sales tax. The change would create an "enormous task" for small businesses, said Marks, who favors a national sales tax rather than the proposed legislation.

"As a small business, I would much prefer to fill out one form and one check, and let the federal government worry about allocating the money back to the state," he said.

(Read More: Peeling Back the Internet Sales Tax)

Jim Fredlund is vice president of tax and logistics at Digital River, a global e-commerce business that helps companies navigate the tax compliance and regulatory system and whose customers include Microsoft and Samsung.

"I don't think states will be very sympathetic toward online businesses' ability to comply with the Marketplace Fairness Act," Fredlund said. "There's a whole world of burden coming between doing the tax up front, compliance and handling the audits."

Fredlund said compliance with the online sales tax will be especially difficult for smaller businesses, forcing them to hire accountants or outsource. Either way, he said, it will increase business expenses.

"Larger companies are capable of absorbing the cost of outsourcing better than smaller ones," he said.

Retail giants supporting the bill include, Wal-Mart Stores, Target and Best Buy, which are already required to charge taxes online because they have a physical presence in most states.

(Read More: Internet Sales Tax May Be an 'Early Christmas' for Retailers)

"The intent is to create a level playing field in which all businesses compete in relationship to the other on a fair basis," said Brad Anderson, the former CEO of Best Buy and a member of the Job Creators Alliance.

But eBay has been outspoken against the bill, saying that it will hurt its sellers, in particular small businesses.

"When small businesses all across the nation are struggling to keep their doors open to customers, this is certainly not the time to require small online retailers to collect and remit sales taxes in up to 9,600 jurisdictions nationwide," eBay's website says.

Though the legislation exempts businesses with less than $1 million in out-of-state sales annually, eBay proposes raising the exemption to $10 million and to businesses with fewer than 50 employees.

"We're fighting over a small business definition that's really tiny," Brian Bieron, eBay's senior director of global public policy, told CNBC. "It's remarkable that businesses that sell tens of millions of dollars in every one of their stores would be fighting to put a new tax burden on businesses at the million-dollar level."

(Watch: Former Best Buy CEO and eBay Director of Global Public Policy on Internet Tax Bill)

As for the Marketplace Fairness Act's chances in the House, Fredlund said it is simply a matter of time before Congress implements an online sales tax.

"The urge for states to tax remote sales has been there a long time," he said. "The states are hungry for revenue, and they view this as an unfair gap."

There is one quick way to make tax burdens fair among all businesses, small and large, nationwide: eliminating sales tax altogether, Fredlund said.

Marks agreed, "No tax is good for small business!"

—By CNBC Associate Producer Elizabeth Schulze. Follow her on Twitter: @ESchulze9