Alabama is losing out on a source of revenue due to its inability to collect taxes on internet sales. Our state lost about $100 million in 2010, based on Revenue Department estimates, because Alabama does not have a way to capture sales tax on internet, catalog and telephone sales. According to Curtis Stewart, director of Tax Policy and Research for the Alabama Revenue Department, until the state can get the sellers to collect the tax, it will remain very difficult to get the tax money the state is due. Across the country, states are dealing with sharp reductions in sales tax revenue. Many believe that’s due in part to consumers shopping online or by phone.
Some states have pushed Congress for years to pass a uniform sales tax law that would enable states to collect the tax on sales from online and similar purchases. Thus far Congress has failed to act. Currently, Alabama has only two ways to collect the 4 percent state sales tax for purchases consumers make on the internet or through catalog and telephone sales:
• Companies that have a physical presence in Alabama are required to collect the tax on such purchases and forward the money to the state.
• Consumers who do not pay the tax are supposed to report the purchases on their state income tax forms each year, which rarely happens.
According to Mr. Stewart, most folks don’t pay the tax on items bought on-line. It doesn’t take an expert on tax law to figure out that it would be much more efficient to have the seller pay the tax. They don’t want to do that because the seller would lose its price advantage over the local retailers.
Alabama took a step toward uniform sales taxes in the 2011 session of the Legislature with passage of a House bill by Rep. Mike Hill, R-Columbiana. This law sets up a commission to establish regulations and develop computer software the state would need if Congress acts on a streamlined sales tax law for all states. That puts Alabama in line to be among the first states to receive the taxes if Congress passes the needed legislation. Debate has gone on in the Legislature for several years about whether the state can develop a system to collect the sales tax, even if Congress does not act. Rep. Hill had this to say in a media interview:
I hear every year that we can’t really act until Congress does, but that has always puzzled me. I think we can do it. I know I am a Republican and I’m supposed to be against taxes. But I think it is unfair to businesses that have come here and invested in the state not to collect it on those sales, too.
Without any doubt, Alabama needs the additional $100 million in annual sales tax revenue. But so far the leadership in Congress hasn’t seen fit to push this issue. I am not sure what else Alabama can do to collect these taxes. In any event, I have to wonder why Congress won’t act on this important issue. Surely it isn’t because of lobbying activities by those who like the status quo — or is it?
Source: Times Daily
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