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MOUNDS VIEW, Minn. -- With all the talk about small business being America's lifeline we found one owner who knows all too well, all talk and no action has put Main Street on its death bed.

"The government has made it impossible for small business to survive," Larry Lurcat, owner of the now closed Corvette Specialties store in Mounds View said Friday.

What is closing Larry's shop is a gross unfairness in state and federal tax law.

For every Corvette part Larry sells, he adds the required sales tax.

And for every Corvette part sold online, to customers in Minnesota from ANY retailer that doesn't have a store in Minnesota, no tax at all.

It ended Larry's dream to sell Corvette parts until retirement.

And it's wiping out hundreds of millions of dollars Minnesota could collect and spend on any number of things.

"We estimate that in 2011 we lost about 400 million dollars in sales tax revenue from people buying items outside of the state of Minnesota," Commissioner of the Minnesota Department of Revenue Myron Frans said.

In theory, a person in Minnesota who spends more than $770 dollars online in a year should file what is called a Use tax form and pay the state taxes on those items.

In 2011 only 581 people filed that form with the state and Frans know more than 581 people spent that much and more online.

But there is a kink in federal law that doesn't mandate the online seller who does not have a brick and mortar store to collect sales tax on a transaction with a buyer in this state.

Think of a company like Amazon.

It doesn't have a store in this state and in fact, not in most states.

So buyers from all of those places aren't paying taxes on what they purchase.

Frans thinks that should change.

"The local Main Street business isn't getting the sale, we are not getting the sales tax revenue so it is a double loss for Minnesota," Frans said.

Only Congress can require all remote sellers, online sellers who have Minnesota customers, to collect sales tax based on the product destination.

Right now Senator Amy Klobuchar has co-signed a bill with Montana Republican Senator Mike Enzi and fellow Democrat Dick Durbin to end this unfairness.

The bipartisan Marketplace Fairness Act would give states the authority to require out-of-state businesses, including online retailers, to collect sales taxes if a state meets certain requirements, including an easily identifiable tax rate, uniform tax-base rules, and centralized filing.

The legislation is too little too late for Larry Lucast.
He sold his business last week to a man in South Dakota.

So much for small business being the American Dream, at least for Larry.

"I just, I can't afford to support the business out my own pocket just for the fun of being here," Larry said.

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