Category Archives: News

New Unofficial 51-Star American Flag Now Available from Online Stores, Inc.

FLGUN351000032341-_-00_51-Star-American-Flag-3ftX5ft-Sewn-NylonNew Stanton, PA – 22 August 2014 – At the request of customers from Puerto Rico, Online Stores has produced the first commercially available 51-star American flag, symbolizing the possible conversion of Puerto Rico from a US Territory into US state. Social media followers of the US Flag Store, the flag division of Online Stores, offered their thanks and support when the flag was announced. American made of weather-resistant nylon in the popular 3’x5’ size, the flag retails for $23.95 and is available for purchase online at the using this direct link The flag is of course not an official US flag yet as it has not been adopted by Congress.

Jorge, a customer of Online Stores, Inc. said, “As a proud American citizen and a native of Puerto Rico, I would like to see my island as the 51st State of the Union. After 519 years first as a US colony and then as a US territory, the people of Puerto Rico demand equality so we can enjoy the full rights, obligations, and responsibility of the continental US. I will be flying your 51-star flag.” Says Cheo, “I currently live in Texas. This flag will be the symbol for the more than 3 million supporters for PR statehood. I will personally fly and display this flag at home as well as pro-statehood meetings.”

Earlier this year, Puerto Rico took a step towards being the 51st state with the introduction of the Puerto Rico Status Resolution Act into the Senate. This bill requires a binding referendum to be held in Puerto Rico asking whether the territory wants to be admitted as a state. The majority have already voted to become a state. (

Puerto Rico is a self-governing commonwealth in association with the United States, that recognizes the United States President as authority. The US controls their currency, military, law, postal system, and Social Security. (

Online Stores, Inc. is a privately held American e-commerce business and a top 500 retailer, based in New Stanton, PA. The company operates several web sites including,,,, and Online Stores serves over 500,000 customers every year.

PA Senator Pat Toomey Responds to OLS

Though many businesses have expressed distaste for the Marketplace Fairness Act to the Senate,  Online Stores, Inc. was shocked to hear that the bill was passed on May 6, 2013. Pennsylvania Senator Pat Toomey voted against the bill and replied to CEO, Kevin Hickey’s personal letter of the bill’s negative impact stating:

May 9, 2013

Dear Kevin,

Thank you for contacting me about the Marketplace Fairness Act (S. 743). I appreciate hearing from you.

As you may know, on May 6, 2013, the Senate passed the Marketplace Fairness Act by a vote of 69-27. Among its provisions, this measure would enable state governments to levy sales taxes regardless of whether the transaction occurs in a physical store or online. I voted against this legislation because I am concerned that many difficult issues relating to this policy have not been addressed. While I understand the concerns that many retailers in my state have raised about online sales, I also have heard the concerns of online retailers who would be subject to the thousands of tax jurisdictions across the country. Moreover, in my view, the legislation’s small business exception of $1 million in revenue is too low and many mom-and-pop retailers could get swept into this costly new tax regime.

Establishing a new online sales tax system across the country is a very significant, complicated proposal. It has the potential to impact almost every American consumer and our entire retail industry. In my opinion, such legislation should first come before the Senate Finance Committee and receive public hearings and careful vetting before being considered by the full Senate. Unfortunately, S. 743 was rushed to the Senate floor without the benefit of such committee hearings or vetting. Also, my colleagues and I were not allowed to offer amendments and try to improve the legislation during Senate debate.

Currently, S. 743 is pending before the House of Representatives for further consideration. As the legislative process continues, please be assured that I value your input and will keep your views in mind should the Senate revisit this matter.

Thank you again for your correspondence. Please do not hesitate to contact me in the future if I can be of assistance.




Pat Toomey
U.S. Senator, Pennsylvania


Pennsylvania Senator, Bob Casey who voted in favor of this bill, has yet to respond to Online Stores concerns after multiple requests.

See also:The Cost of Complying with the Marketplace Fairness Act

See also: OLS Sends Press Release About Negative Impact of the Marketplace Fairness Act

The Cost of Complying with the Marketplace Fairness Act

With the decision to pass the Marketplace Fairness Act drawing closer, Online Stores Inc., has determined that the costs to comply with the proposed bill is going to be exorbitant for small businesses. OLS has sat down and deciphered just how much it is going to cost in the first two years of implementation.

Several different costs will be associated with the passing of the new bill. Among these costs include management time to review the obligations, create an execution plan and determine how to monitor, the purchase of the software, set up and maintenance fees, and fees per transaction, just to name a few! All of these costs begin to accrue and after just one year, OLS has estimated its costs to be over $360,000!

Please see the attached spreadsheet outlining more specifically costs that OLS is expecting to endure with this passing bill:

Online Stores cost of sales tax compliance

See also: The Effect of the Looming Marketplace Fairness Act on OLS

See also: Online retailers call Internet sales tax a ‘nightmare’

OLS Sends Press Release About Negative Impact of the Marketplace Fairness Act

FOR IMMEDIATE RELEASE                      May 1, 2013

Marketplace Fairness Act May Cost Over 200,000 Jobs

Online Stores, Inc. calculates how the new Marketplace Fairness Act will impact small eCommerce businesses.

New Stanton, PA—With the Marketplace Fairness Act passing through the Senate, Online Stores, Inc. has determined its cost of compliance with the sales tax laws of all 50 states and the likely impact on other small online retailers.  If this bill passes Congress and become law, we estimate our cost of compliance will be $360,000 on sales of $30m in the first year. This amount is greater than our average net profit over the last 3 years. We estimate the net additional sales tax revenue we’ll collect,will be less than our cost of compliance.  We believe the impact of this law on small to mid-sized retailers will result in the closure of over 9,000 companies with the loss of 200,000 jobs.

Online retailing is a very competitive business and net profit margins are typically low in the -4% to +5% range, driven by the market leader, Amazon, which is running at only 1% net profit. Companies are investing in website technology to support mobile commerce, compliance with credit card security rules, faster delivers and better customer service. The compliance cost in the first year of implementation of the Marketplace Fairness Act, according to Online Stores, Inc.’s calculations, will be greater than the average level of profitability for companies under $10 to $20m. It also adds a very significant burden to management, taking time and resources away from competing against larger competitors. For smaller companies, and even some larger companies, The Marketplace Fairness Act will cause chaos. We estimate that approximately 9,600 companies will fail, including almost 30% of companies under $10m in sales. That equates to 228,000 lost jobs in at online retailers, catalog companies and any company that operates a retail website. The estimate does not include loss of employment at suppliers, shipping companies and service providers, such as accountants and software developers.

“We think this is an undue burden on smaller Internet retail businesses.” said Kevin Hickey, CEO of Online Stores, Inc. “State sales tax is very complicated, for example there are over 140 conflicting and overlapping codes for clothing and footwear alone.  Knowing which items are taxable and at which rates often goes to “case law” based on sale tax appeals and can change at any time for any state.  In addition, shipping charges may be taxable, non-taxable, taxable based on order value, amount of handling fees added, percentage of taxable items ordered or which shipping method is selected to quote just a few examples from different states!

If we get the classification of a product wrong and we do not charge sales tax correctly, the states have Draconian power to make us pay all the uncollected taxes with penalties and interest, in some situations making the company directors personally liable

This law will be a major burden for a large number of companies, and will be a major impediment to new company formation. Who wants to start a business and file sales tax forms for 45 states from day 1?”

Online Stores estimates that Avalara, the market leader in sales tax calculations, will need to bring over 20,000 new customers online to collect sales tax in 30 to 60 days to support the 90 days advance notice period proposed.  Many small Internet retailers are using the Yahoo Store shopping cart, which isn’t designed to collect sales tax for all states or to link to sales tax software such as Avalara. These companies will be forced to switch to a compatible shopping cart in a very short time frame, or risk being penalized for not collecting, or worse, go out of business.

Online Stores suggests exempting businesses with sales under $50m, since the tax revenue collected will be less than the cost of compliance. In addition companies should be allowed at least 12 months’ to comply with the sales tax collection requirements.


About Online Stores, Inc.

Online Stores Inc. is an eCommerce company based in New Stanton, Pennsylvania, with 2012 sales of $30 million. The company was founded in 2002 and operates five stores:  United States Flag Store, English Tea Store, Discount Safety Gear Store, Safety Girl Store, and Construction Gear Store The company is privately owned and employs approximately 80 people.

For further information contact

Kevin Hickey


Online Stores Inc.

724-925-5627 or 724 493 9212

See Also: The Effect of the Looming Marketplace Fairness Act on OLS

Reuters ran the above press release:

The Effect of the Looming Marketplace Fairness Act on OLS

The vote on raising taxes for online retailers and their consumers is getting closer. The Senate is planning to vote on Internet sales taxes some time in May to determine if online retailers will be responsible for collecting sales tax for out-of-state consumers (see also: The Great Online Sales Tax Debate). Should this bill come to pass, Internet retailers that do NOT meet the Small Seller Exemption (less than $1,000,000 of total remote sales) will have only 90 days to begin implementation (source: So how will this effect Online Stores, Inc.?

Online Stores, Inc. is an online retailer with sales of $30m a year. We have studied the Marketplace Fairness Act and estimated our cost of implementation and compliance. We have used these estimates to extrapolate the costs for the industry. Here are our conclusions (see below for link to calculations on how we came to these conclusions):

$4.9 billion in additional sales tax will be collected for the states

Of this, $3 billion is from companies larger than $50m in sales. Our estimate is lower than other estimates as they do not consider the high percentage of eCommerce revenue which is through retailers with “brick and mortar” operations like Walmart, Target, Best Buy etc., who are already collecting sales taxes. Other estimates also do not consider that a significant percentage of “retail” eCommerce transactions are purchases by businesses, where tax is paid as Use tax, and many retail eCommerce sales are vehicles, where taxes are collected through the vehicle registration process.

$2.4 billion cost of collection in year one ($1.2 billion year two)

Year one costs include setup of systems and software to calculate and collect the taxes, management time to understand the complex sales tax laws of 40+ states, and classification of products into tax categories for different states. For companies under $10m in sales, the cost of collection in year one is 40% greater than the tax collected, in year two it is 70% of the tax collected. Most companies over $100m are already collecting (Walmart, Best Buy, etc.).

228,000 jobs are lost as a result

Online retailing is very competitive, driven by the market leader Amazon which is running at only 1% net profit. Companies are investing in website technology to support shopping on mobile phones, compliance with credit card security rules, faster delivery and better customer service. The compliance cost in year one will be greater than the average level of profitability for companies under $10 to $20m. It also adds a very significant burden to management, taking time and resources away from competing against larger competitors. For many smaller companies and even some larger companies the Marketplace Fairness Act will be the straw that breaks the camel’s back. We estimate 9,600 companies will fail, including almost 30% of companies under $10m in sales. The estimate does not include loss of employment at suppliers, shipping companies and service providers such as accountants and software developers.

$8.16 billion lost wages, $3.4 billion lost in federal and state income taxes year one

As a result of 228,000 lost jobs, $8.16 billion in payroll will be lost, plus $2.45 billion in federal and state income taxes. The $2.4 billion in collection costs reduce profits by a similar amount resulting in a reduction in Federal and State taxes of $1 billion. The net collection of additional tax across State and Federal government is only $1.45 billion.

90 days to notice to start collecting will cause chaos

Many companies will be forced to use a single supplier, Avalara, due to technical issues. One company is unlikely to be able to bring over 20,000 new customers online in such a short amount of time. Yahoo Store shopping cart is the most widely used software by small retailers. It is not designed to collect sales tax for all states and is not integrated yet with Avalara. Many retailers will be forced to switch shopping carts in a very short period of time to be able to collect the taxes, go out of business, or not collect the taxes and risk fines and penalties. We suggest a 12 months’ notice period.

The proposed law impacts manufacturers, not just online retailers

Manufacturing companies often have very profitable direct eCommerce operations selling products and spare parts directly to consumers and wholesale customers. These companies will need to comply with the law and put into place systems to collect tax, or stop selling directly. This increases the number of companies that will have to collect the tax significantly.

Our suggestions:

Exemption should be $100m

Introduce the bill, but make it apply to companies with more than $100m in retail sales, and with at least 12 months’ notice. These companies can mostly collect the tax and only a few will be seriously impacted.

Collect sales tax on Amazon and eBay

We suggest the marketplaces with over $100m in sales (Amazon marketplace, eBay, etc.)  be required to collect and pay the sales taxes on behalf of all sellers on those marketplaces. This will collect a large amount of tax revenue at minimal cost to the sellers, as Amazon and eBay will do the paperwork and pay the taxes to the states. The states will also not have to deal with 10,000 taxpayers, just two, which will be much easier for them.

Online Stores, Inc.  has forwarded these concerns and suggestions to members of the Senate in hopes they will understand the effect this bill will have on smaller online retailers.

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