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Future of online sales taxes up in air

  • The Wichita Eagle
  • Published Wednesday, Jan. 8, 2014, at 5:26 p.m.
  • Updated Thursday, Jan. 9, 2014, at 6:42 a.m.



Should Congress adopt a law that would allow states to require businesses to collect sales tax on online retail purchases?


• To see a copy of the Marketplace Fairness bill that passed the Senate, go to www.gpo.gov/fdsys/pkg/BILLS-113s743es/pdf/BILLS-113s743es.pdf.

• More information about the group that supports the legislation can be found at www.standwithmainstreet.com.

• Information from opponents of the bill can be found at http://werherecoalition.org.

As the adage goes, the only things certain in life are death and taxes.

But for retailers, the future of sales taxes on online purchases is far from certain.

Supporters of the Marketplace Fairness Act, which passed the U.S. Senate last spring and was referred to a House committee, say that online retailers have an unfair advantage.

Because they aren’t required to collect taxes, online stores can offer their goods for less.

Online retailers counter that forcing them to collect taxes is too cumbersome and will hurt online retail stores – and shoppers.

Midwest Drum and Percussion, 2228 E. Douglas, sees both sides of the argument.

The store does about 10 percent of its sales online – mostly out of state – so it doesn’t collect sales tax for those purchases, said store manager Matt Jansen.

“No one likes to pay taxes, but the truth is that as Wichitans and Kansans, we benefit from taxes to our state,” Jansen said. “The way it is now, we’re not just losing benefits as local merchants, but we’re missing out on tax dollars to fund roads, the city and parks.”

In December, the Supreme Court refused to hear a case on New York’s Internet sales tax. In the case, Amazon.com and Overstock.com were appealing a court decision that required them to charge and collect sales taxes on purchases made by New Yorkers.

“I think the Supreme Court definitely sent a message,” said Watermark Books owner Sarah Bagby. “It’s good news. It indicated fairness, and the federal action is still up in the air. However, I think there is some momentum.”

The National Council of State Legislatures estimates that states lost more than $23.3 billion in 2012 in tax revenue because online retailers aren’t required to collect sales tax. And the figure is expected to climb as online sales continue to grow much faster than the rest of the retail sector. For example, online sales during the holiday season increased about 10 percent, according to ShopperTrak, while traditional retail stores saw an increase of less than 3 percent.

Currently, retailers typically charge sales tax if they have a physical presence in the state.

Amazon.com collects sales tax in 19 states, including Kansas.

Greg Hephner, owner of Hephner TV, 737 S. Washington, said he supports the Marketplace Fairness Act.

“As a principle of tax fairness, it is certainly valid,” said Hephner, whose business started as Hephner Radio in 1950 and has added TVs and electronics over the years.

“Whether this particular arena or any other arena, I think businesses should all compete on the same level. I don’t think tax breaks should be given to any particular industry ... at the expense of others.”

Legislative stance

The Marketplace Fairness Act was introduced by Sen. Michael Enzi, R-Wyo., and passed the Senate with a rare mix of bipartisan support.

It would allow states to require the collection of sales taxes while exempting smaller online retailers.

Kansas Sen. Pat Roberts voted against the bill, and Sen. Jerry Moran didn’t vote, according to the roll call information on the Senate’s website.

It’s unclear where Kansas’ four House members stand on the issue or when or whether the House will take up the measure.

Staff members from the offices of Reps. Tim Huelskamp, Lynn Jenkins, Kevin Yoder and Mike Pompeo declined multiple requests for comment about the measure.

Contributing: Associated Press

Reach Kelsey Ryan at 316-269-6752 or kryan@wichitaeagle.com. Follow her on Twitter: @kelsey_ryan.

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