Internet taxes slipping away

The Huntsville (Ala.) Times: Alabama politicians someday may be faced with a decision over whether to require online retailers to collect tens of millions of dollars in sales and use taxes slipping away every year.

According to an analysis from the University of Alabama in Birmingham, state, county and city governments are losing about $200 million a year in uncollected taxes on Internet sales, $1 billion every five years. In addition, the state is losing the potential to add 3,500 to 4,000 jobs a year because of the loss of retail sales.

State law requires residents to pay sales taxes on Internet transactions — there’s a place on state income forms to report those taxes due — though relatively few people do so.

But many people do know better and buy off the Internet to save money on a purchase, and not just on the sales tax. Retailers report that some people use their stores as showrooms to check out an item and then go online to buy it at a discount from a big Internet retailer who can sell for less because they move a lot of merchandise.

The solution to this huge loss of revenue might be simple except for a 20-year-old U.S. Supreme Court ruling that retailers who have no physical presence in a state cannot be required to collect taxes on sales originating there. A bill pending in Congress would establish a national Internet sales tax.

And for state and local governments, this is a problem that will only grow larger as time goes by.

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