Missouri pressing for online sales tax
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Missouri pressing for online sales tax

Date: May 3, 2011
By: Kacie Yearout
State Capitol Bureau
Links: HB966

As more consumers are buying online, Missouri legislature looks for a way to start collecting the millions of dollars in sales tax.  
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Wrap: The bill would have Missouri join the coalition under which out-of-state businesses collect taxes for online purchases by Missourians.

Twenty-four other states are already part of this group, and St. Louis County Representative Margo McNeil wants Missouri to join them.

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Description: "This will allow the state of Missouri to collect the taxes that are owed on out-of-state internet companies."

Under Missouri law, online consumers are supposed to report their online sales tax on their income tax returns. Federal Tax Authority, a company that offers services to help businesses collect taxes, says this rarely happens.

Federal Tax Auhtority's Chief Executive Officer David Campbell says this is causing a major tax revenue loss for the entire nation.

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Description: "Approximately 23 billion dollars of sales tax goes uncollected each year. That includes both e-commerce as well as other remote retail, for instance mail-order catalogs or television sales."

Just for Missouri, Campbell says loss estimates for 2010 are about 160 million dollars per year.  

If Missouri joins the Streamline Coalition, more than fourteen-hundred companies from around the country would immediately start collecting tax revenue from Missourians purchasing their products online.

The sponsor of the bill to start collecting the tax is St. Charles County Representative Doug Funderburk. He says this will be an important revenue source for local governments.

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Description: "And without that revenue, local services are going to diminish. We're going to see our infastructure supports lose their funding, local law enforcement lose its funding, local fire services."

Along with supporting local governments, it supports Missouri retailers. McNeil says this bill is essential for small businesses who don’t have online sales.   

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Description: "This levels the playing field for our Missouri businesses."

While many small businesses are rallying behind the bill, some big online retailers are fighting against it. National Tax Union’s Executive Vice President Pete Sepp says some big retailers are having problems with the bill because it is anything but simple.

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Description: "There are many complexity issues and there are many competitiveness issues."

Retailers like Amazon, Ebay, and Overstock are against the bill. Overstock.com President Jonathan Johnson says it would be a lot of work to manage so many different state tax collections.

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Description: "There are over 8,000 taxing jurisdictions in the United States, and they all have different rules, and they all have different holidays."

Besides the difficulty for large companies, National Tax Union’s Sepp says that it would be costly to small businesses. National Retailer's Federation spokeswoman of Government and Industry Relations Maureen Rhiel says there is a plan to deal with this.  


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Description: "A lot of the critics that say it would be costly actually don't understand what the plan is, and the plan is that there be a cost reimbursement, or that you can outsource it."

While there is a plan for small businesses, many medium-size businesses are concerned with the responsiblity for collecting the different taxes for so many states. Direct Marketing Association's Senior Vice President for Government Affairs Jerry Cerasale says that duty creates a new burden.

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Description: "The liability portion on the marketer is huge. These marketers don't have a huge profit margin and this can be a problem."

With states starting to regulate collection within, opponents say it takes away competition between states to keep taxes low. The National Tax Union's Sepp says that it could lead to higher rates.

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Description: "That could spell difficulty not only for the small businesses collecting the taxes, but the individuals making the purchases."

He also says the estimated tax losses are probably not as large as quoted. National Retailer Federation's Rheil says the new revenue will not only help the businesses, but states.

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Description: "It's a good thing for businesses in that state and its certainly a necessity for balancing the budget, which every state has a consitutional requirement to do."

With two weeks left in the legislative session, the bill is dead for this year. Bill sponsor Funderburk says the bill will be a two to three year process.  

Reporting from the State Capitol, I'm Kacie Yearout.