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Roger Harris: Uncollected Internet Sales Tax Unfair

by taxnick on July 23, 2011

You may have noticed that the Internet is everywhere.

We bank, watch movies and read newspapers on the Web. We use smartphones to check stock prices and school schedules.

We can all agree that the Internet is not a fad.

We should also agree it’s now time for the Net to grow up. It’s time to end the free tax ride that online retailers enjoy.

Billions of dollars are at stake.

Support for a national solution to make it easier for states to require online retailers to collect sales taxes has grown in recent years. Unfortunately, it doesn’t look like Congress is inclined to tackle the issue anytime soon, judging from comments from some of Tennessee’s delegation.

U.S. Rep. John J. Duncan Jr., R-Knoxville, is “still studying the issue and wants to look into it further,” a spokesman said.

U.S. Sen. Bob Corker, R-Tenn., “is aware of the complex issues involved with state sales taxes and online commerce. He is currently reviewing options for addressing the problem and will consider legislation when it is introduced in the Senate,” according to an email statement.

At the state level, Gov. Bill Haslam says he’s willing to take a lead role in raising awareness of the Internet tax issue. The recent National Governors Association meeting would have been a good chance to rally support, but the federal debt ceiling controversy dominated conversation, Haslam spokesman David Smith said.

Haslam’s next move on the Internet sales tax issue is “to be determined,” Smith said.

Twenty years ago there were reasonable economic and technological reasons to exempt Internet retailers from collecting state sales taxes. Those reasons are no longer valid.

Online retailing is a mature industry generating billions of dollars in revenue every year. The technological hurdles to collecting state sales taxes are minor.

It comes down to basic fairness. Sales tax law should be applied equally to all retailers, whether online or traditional. No one likes to pay taxes. Not paying sales tax when you buy a $1,600 refrigerator from is very popular with consumers.

It takes a politician with real backbone to take a stand against such a popular tax loophole.

The arrogance of online retailers will cost states $12 billion in uncollected state and local sales taxes in 2012, according to a study by the University of Tennessee Center for Business and Economic Research. In Tennessee alone, uncollected Internet sales taxes will total $410 million in 2012.

It’s time for Tennessee’s elected leaders to bring that money home.


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