Traverse City Record-Eagle

Michigan

May 6, 2013

Lawmakers targeting Internet sales taxes

LANSING (AP) — Michigan lawmakers are pushing measures aimed at going after the hundreds of millions of dollars in outstanding taxes each year from sales over the Internet, but they may have to wait for a federal measure to pass for the dollars to really start rolling into the state.

Under bipartisan bills being debated in the state House, Internet retailers like Amazon or eBay would have to charge sales tax if they have distribution centers or warehouses in Michigan or are affiliated with in-state businesses whose websites steer customers to the larger retailer.

Supporters — like the Michigan Retailers Association — say the bills taken up by the House Tax Policy committee will bring in revenue and help level the playing field for local businesses that must collect sales taxes.

But Michigan’s Treasury Department, while supporting the bills, estimates that the proposed law won’t generate much revenue — unless the federal government takes action.

The U.S. Senate is expected to vote on legislation this week that would give states power to compel online retailers to collect state and local taxes for purchases made over the Internet.

States now can only require stores to collect taxes if the store has a physical presence in the state. Consumers are supposed to declare all remote sales — which includes items bought over the phone and on the Internet — when they complete tax returns and pay a 6 percent use tax. But since that isn’t enforced, it rarely happens.

Tom Scott, spokesman for the Michigan Retailers Association, said the competitive advantage for online retailers hurts brick-and-mortar business’ cash registers every week.

“This is a huge challenge for them,” he said.

The Treasury Department estimates that $460 million in taxes from remote sales is due in Michigan this fiscal year and most of that will go uncollected.

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