FORT WAYNE, Ind. (WANE) - The U.S. Senate is on the verge of passing a bill that would give states the power to force retailers to collect the sales tax from online shoppers. According to the Indiana Fiscal Policy Institute, each year Indiana loses as much as $114 million in sales tax revenue from online sales.
The issue has usually been left up to each state. A week ago, Indiana lawmakers decided to not speed up a law requiring Amazon.com to start collecting sales tax.
"A lot of states have tried to point to the feds to take some action because the reaction at the state level has been kind of mixed," Mike Landram, the president and CEO at The Greater Fort Wayne Chamber of Commerce, said Friday. "I think legislatures across the country are starting to see the loss of the sales tax revenue on online businesses."
Under current law, online retailers only charge state sales tax if they have a brick and mortar store where the consumer lives. While it legally required for online purchases, buyers don't always report it when filing their taxes each year. Between all 50 states combined, that's billions in sales tax revenue that isn't collected.
"One would argue, and I would too, that it's not a new tax," said Landram. "Even in Indiana, Indiana residents, through their tax return each year are suppose to report those purchases they made as Indiana residents that were made out of state, not covered under Indiana sales tax.
"I think what's really driving it is state legislators across the country are really starting to feel the loss of their own respective sales tax revenues and they've been putting a lot of pressure on their federal delegation for quite some time. I think now finally, there's some recognition that the feds maybe should step in and make it a federal manner."
To some, the bill creates a level playing field for brick and mortar business and businesses that solely operate through the internet.
"My thoughts are is it's becoming more and more increasing difficult for small business to survive," Dave Kerschner, an owner at Crazy Pinz, said. "The only thing I stress is a fair playing field for everybody. If we have to pay sales tax, the online people have to pay sales tax also."
Kerschner's business does most of their sales with customers who walk inside his doors, but a pro shop at Crazy Pinz does do some business online.
"I think it does need to be consistent, and maybe the federal level is the better avenue for it to be enforced," Chris Lambert, the owner at Christopher James Menswear, said.
Lambert's business does zero sales through the internet.
While supporters have said the bill levels the playing field, opponents to the bill have said it could create extra work, and that might cost jobs.
"The last thing I want it to do is have a negative effect on jobs," said Lambert.
"You don't know, is that business going to offset that compliance cost by decreasing other people in other functions as a result," Landram stated.
The bill could have exemptions for businesses that generate revenue under a certain dollar amount. Landram said the less complex it is for businesses to get sales tax to the appropriate states and local governments the better.
"Hopefully, the feds can find some middle ground on it that gets the end result which is maybe setting up a vehicle to better collect these sales taxes," he said. "And get them in the states they belong to and not make it too burdensome on the part of the online retailer to do all that."
The Senate is expected to vote on the bill some time within the next week. The House is also expected to take a similar vote sometime shortly after that.
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