"The burden on the small businesses is huge," Paula Hiatt said.

Different tax definitions

Seth Hiatt said the $5 million "small business" definition is unique to this bill and "pulled out of thin air." Other federal definitions of small businesses describe larger entities than what the Hiatts have built. He said that under the Family Medical Leave Act, businesses need to have fewer than 50 people to be considered a small business, and the Small Business Act limit is $21 million.

He would much rather see either of those definitions used in a bill Congress would pass to protect smaller retailers like him, rather than the $5 million limit in the language now. "I'm going to be the one filling out all the forms," he said.

The current bill also could force online retailers to raise prices to cover any additional costs their businesses would incur in trying to keep up with the new tax.

Patrick Byrne, chairman and chief executive officer of Overstock.com, said brick-and-mortar stores make use of the local infrastructure, and online businesses do not, so there is no reason to apply a local sales tax to something bought via computer.

"It's the nature of the government to want more," Byrne said. "Since when is the government about fairness?"

Byrne said the different tax definitions among the various tax entities cause problems. A set of skis in one tax jurisdiction can be considered clothing, while another jurisdiction could categorize it as a piece of sporting equipment, which can have a different tax level. He said Overstock.com has 1 million products, and it could take $2 million to $5 million a year alone just to manage the tax definitions, not including what costs it would add to the products being taxed.

Byrne contends that the bills before Congress would benefit mainly big companies such as Target and Wal-Mart. "This is the Target and Wal-Mart Protection Act," he said.

Lena Michaud, Target's senior manager of communications, said the Minnesota-based chain supports the Streamlined Sales Tax Project. She said having sales tax for online purchases "will create a level playing field between all retailers, no matter what their geographic location or whether they sell in brick-and-mortar or online stores.

"Target believes that a glass sold in a store should be taxed the same as a glass sold online. It's a matter of fairness and community vitality," Michaud said.

State coordination