Lawmakers Fight for Online Sales Tax Collection

by Luke Jones  on Monday, Oct. 8, 2012 12:00 am  

From left, Jacob Cockcroft, Jean Cazort, a cutout of TV personality Stephen Colbert and David Cockcroft at Wordsworth Books & Co. (Photo by Michael Pirnique)

"One of the opportunities this legislation has is it's included in the lame-duck session of Congress," Coon said. "As we're approaching the fiscal cliff and sequestration, one of the things talked about is reforming how we're spending federal dollars and trying to address the spending reductions that need to be made. The federal government spends a lot of money on states."

More state revenue could reduce reliance on federal dollars, helping soothe the deficit in the long run, he added.

But the direct and immediate impact would be on state governments.

"My ultimate concern is the loss of tax revenue for the state," said David Cockcroft, treasurer for Wordsworth Books & Co. in Little Rock.

Arkansas collected about $2 billion in sales taxes in 2008. That's fallen to $1.5 billion in 2011. The International Council of Shopping Centers stated that, collectively, states were losing between $21.5 billion and $33.7 billion annually in uncollected sales tax.

Arkansas law requires consumers to pay uncollected sales tax through their annual income tax returns. But that rarely happens.

"Most people are unaware they're supposed to pay it," Coon said. "The Department of Finance & Administration has gone after people, made them go back five years and calculate all their purchases online, then write a check at the end, sometimes with penalties and interest."

In the meantime, online purchases can appear to be several percentage points cheaper than in-store purchases.

"It provides a significant, built-in advantage for online retailers," Brewer said. "If a state has a sales tax, it should apply equally to everybody. The government shouldn't pick winners or losers."

In sales tax fairness, the losers are the very businesses that employ local workers and otherwise contribute to what Brewer called "the fabric of the community."

Coon agreed.

"I think people enjoy the convenience of buying things online," Coon said. "But I think brick-and-mortar stores are the folks sponsoring the softball teams; they're the ones paying taxes and providing jobs. Ultimately, online is convenient, but walking down the street is convenient, too."

Retailers are "frustrated," Coon said. One of them is Cockcroft.

"I hate that we have to collect 8.5 percent even if Amazon or Barnes & Noble is selling at full retail like we are," Cockcroft said. "It used to be that [online buyers] had to pay shipping, which was to our advantage, but now Amazon often offers free shipping. We try to do the best we can in the local community. A lot of people don't want to wait three days for a gift, so we're here when they need us."



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