Tax time has come for out-of-state sellers
West Virginia income tax forms include a line that requires residents to report Internet purchases, but, according to state Tax Commissioner Craig Griffith, making the reportage voluntary means many residents don’t, costing West Virginia as much as $100 million in lost sales tax revenue.
Now, a bill that would require online retailers to collect tax revenue on goods and services sold to out-of-state buyers is making its way through the U.S. Senate and could likely meet approval despite longstanding opposition to it by Republicans, who appear to have turned a corner in their assessment of such a measure. Nationwide, the bill could raise as much as $23 billion annually, according to the National Conference of State Legislatures.
Introduced in the U.S. Senate last week by Republicans Lamar Alexander of Tennessee and Mike Enzi of Wyoming and Illinois Democrat Dick Durbin, the Marketplace Fairness Act enjoys support from a number of Republican governors who have warmed to it in the face of revenue needs to meet whopping budget deficits.
Rather than being pitched as a tax increase, the bill is being trumpeted as one that offers equal treatment to all retailers — out-of-state online sellers and in-state brick and mortar stores, which have faced steep competition by their untaxed competitors. And that seems to be the hook that has Sen. Joe Manchin taking a close look at it. According to a statement from Manchin’s office, the senator “believes that one of the most important things we can do to set this nation on a strong financial path, improve our economy and get people back to work is create fairness in the tax system.”
While trade group NetChoice opposes the bill, according to the Wall Street Journal, despite a provision in it that exempts sellers that gross less than $500,000 a year, Alexander seems to think it’s a bill that’s due for approval.
Even more optimistic is West Virginia Delegate John Doyle, who said revenue raised from the tax could pave the way for the early elimination of the business franchise tax or the food sales tax, which decreased by a penny just this month.
Whether that happens or not, the tax is a good one, both for the revenue it could raise for cash-strapped states, as well as for the lifeline it throws in-state brick and mortar retailers in the elimination of the steep price disadvantage they now face.