Copyright 1999 The Kansas City Star Co.
THE KANSAS
CITY STAR
June 23, 1999 Wednesday METROPOLITAN EDITION
SECTION: BUSINESS; Pg. C1
LENGTH: 514 words
HEADLINE:
Internet sales tax loss upsets states
Federal moratorium
isn't preventing officials from studying the issue
BYLINE: JENNIFER MANN, The Kansas City Star
BODY:
For years, states have lamented their
inability to collect sales
tax on mail order and other
types of nontraditional retailing. Now
electronic commerce
has become part of the issue.
A just-released report by the
Ernst & Young accounting firm found
that only $ 170
million in taxes went uncollected for goods
sold over
the Internet - one-tenth of 1 percent
of total state and local
government sales tax
collections. But that number is expected to
grow.
Consumers bought an estimated $ 2.6 billion in
goods over the
Internet in 1998. Some expect that
figure to explode to $ 220 billion
by 2001.
The Ernst
& Young report was delivered Tuesday to the
19-member
Advisory Commission on Electronic Commerce,
created by Congress to
sort out tax issues surrounding Internet
commerce.
Although federal lawmakers have imposed a
three-year moratorium
on new e-commerce taxes, states
aren't shelving the issue.
"The concern of the states is
that there's so much e-commerce
that's growing by leaps and
bounds that it's eroding the traditional
tax base,"
said Carol Fischer, division director for the Missouri
Division of Taxation and Collection.
"A sale is a sale, and the
method of delivery, whether by
catalog, Internet or a
traditional over-the-counter one, should have
no impact on
whether the sale is taxable."
The Supreme Court has
ruled that one state can't force another to
collect
and remit sales taxes for businesses inside its borders.
Although most states require consumers to figure and pay
sales taxes
on goods bought from out of state, that
requirement is rarely
enforced.
Kansas officials
are planning an interim study on taxes and the
Internet.
"I don't believe we're currently
collecting any sales tax from
e-commerce, and
if we are, it's on a very small scale," said Angela
Goering,
public information officer for the Kansas Department of
Revenue. "I think it's something the Legislature wants to expand
on."
One hurdle to collecting taxes on
sales over the Internet or by
mail order is that each state, county and city has different
tax
rates.
Fischer said Missouri was looking at two
ways to clear that
hurdle. One is to provide a
comprehensive database that would give
the correct tax
rate for each sale, wherever it occurs in the state.
"It
would be a mechanism for them having the correct tax
information," Fischer said.
The other possibility, she
said, is to create a sort of flat-rate
sales tax for goods sold
into Missouri. The problem would be divvying
up
the tax among the state and other entities owed from the
sale.
"It would be very difficult to achieve the
desired result,"
Fischer said. "Under that system,
there should be no big winners and
no big losers."
To reach Jennifer Mann, call (816) 234-4453 or send
e-mail to
jmann@kcstar.com
LOAD-DATE: June 24, 1999 
