Anticipated Counterarguments — And Our Responses
We asked tax professionals to challenge our legal framework. Below are the strongest counterarguments we received and how we've addressed each one. Our goal is a document that IRS counsel cannot dismiss.
Eight Challenges. Eight Responses.
Each challenge below represents a likely IRS or Treasury counterargument. We categorize each by strength and show exactly how we've addressed it.
Our Strongest Arguments
Foreign sellers operate full businesses in the U.S. — not just warehouses
They control pricing, manage advertising, create content, handle customer service, process returns, monitor inventory, and make strategic decisions about U.S. markets. This is not 'warehousing through an independent agent.' This is a U.S. Trade or Business under any reasonable interpretation of IRC §864.
FIRPTA-style withholding is the enforcement model
FIRPTA (IRC §1445) has operated for decades — requiring 15% withholding when foreign persons sell U.S. real property. Applying an analogous model to marketplace disbursements is practical, proven, and evasion-resistant. Platforms already have the infrastructure from sales tax collection.
The enforcement gap is the core problem
The law may already require these sellers to pay. But without a collection mechanism, the law is meaningless. Withholding at the platform level is the only approach that guarantees compliance from sellers with no U.S. assets, no U.S. office, and no incentive to voluntarily file.
The competitive imbalance is unsustainable
1.9 million American businesses pay up to 50.3% in combined income taxes. Their foreign competitors on the same platforms pay nothing. This is not a theoretical policy question — it is destroying American businesses every day. The cost of inaction compounds.