{"id":2070,"date":"2011-11-16T11:10:34","date_gmt":"2011-11-16T17:10:34","guid":{"rendered":"http:\/\/stateimpact.npr.org\/oklahoma\/?p=2070"},"modified":"2012-12-20T10:15:02","modified_gmt":"2012-12-20T16:15:02","slug":"internet-sales-taxes-in-oklahoma-what%e2%80%99s-at-stake-who%e2%80%99s-behind-it-and-why-collecting-them-is-so-complicated","status":"publish","type":"post","link":"https:\/\/stateimpact.npr.org\/oklahoma\/2011\/11\/16\/internet-sales-taxes-in-oklahoma-what%e2%80%99s-at-stake-who%e2%80%99s-behind-it-and-why-collecting-them-is-so-complicated\/","title":{"rendered":"A Guide to Internet Sales Taxes in Oklahoma: What\u2019s at Stake, Who\u2019s Behind it and Inside the Debate"},"content":{"rendered":"
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Kevin H. \/ Flickr<\/p>\n

Oklahoma lawmakers lament tax revenues lost on Internet sales, while brick-and-mortar retailers complain about their sales tax-free competition.<\/p>\n<\/div>

Business leaders and lawmakers in Oklahoma have been ramping up efforts to force Internet retailers to collect sales taxes for states and cities.<\/p>

Here\u2019s StateImpact Oklahoma\u2019s guide to the issue, and the impact it has on key stakeholders and Oklahoma taxpayers.<\/p>

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Background<\/h3>

In Oklahoma, general sales taxes comprise about one-third<\/a> of all state and local tax revenues, and cash-strapped state and local governments need all the tax revenue they can get their hands on.<\/p>

Brick-and-mortar retailers and businesses add directly to state and local coffers by collecting sales taxes.<\/p>\n

The Problem<\/h3>

Increasingly, consumers are buying on the Internet. Oklahomans spent more than $2.9 billion online in 2007, according to a 2009 University of Tennessee study (right-click here<\/a> to download) that estimated the amount of e-commerce sales tax revenues lost annually by each state.<\/p>

Generally, online retailers don\u2019t charge sales taxes on Internet purchases.<\/p>

Nationwide, Internet purchases are responsible for about a $23 billion deficit in state and local taxes, according to the Tennessee study.<\/p>

Oklahoma\u2019s cut of those losses? Between $185 million to $225 million, Oklahoma Tax Commission spokeswoman Paula Ross told<\/a> The Oklahoman<\/em>, citing figures from the study.<\/p>\n

The Question<\/h3>

How do you collect sales taxes from a retailer that doesn\u2019t have a physical presence in the state?<\/p>

In general, you can\u2019t. According to 1992 Supreme Court ruling<\/a> concerning a catalog mail-order company, retailers can\u2019t be forced to collect sales takes in states where they lack a physical presence. But, the court ruled, Congress has the authority to enact legislation requiring such retailers to collect use taxes.<\/p>

And that\u2019s just what lawmakers and business leaders in Oklahoma are pushing for.<\/strong><\/p>\n

Why is This so Complicated?<\/h3>

Each state has its own laws and statutory peculiarities, which poses a challenge for Internet retailers that don’t have a physical presence in the state.<\/p>\n

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Joe Wertz \/ NPR StateImpact<\/p>\n

Oklahomans are supposed to declare the amount of purchases from retailers that don\u2019t collect state sales taxes on their state income tax form.<\/p>\n<\/div>\n

What’s on the Books?<\/h3>

Technically, taxes should be collected on Internet purchases. In Oklahoma and many states, taxpayers are required to self-report purchases made from retailers that don\u2019t collect state sales taxes. This includes Internet and mail-order, catalog, phone, radio and television purchases.<\/p>

But no one really does that.<\/p>\n

What’s Being Done?<\/h3>

Oklahoma is among 24 states that passed a streamlined sales tax agreement<\/a>. The agreement creates a detailed database helps Internet retailers find and apply the proper state and local taxes.<\/p>

Last week, a bipartisan group of 10 U.S. senators co-sponsored the Marketplace Fairness Act<\/a>, which would make it easier for states to collect sales taxes for online purchases made by their residents.<\/p>

Oklahoma business leaders and lawmakers have joined the effort in Washington, D.C.<\/p>

In a letter sent to the state\u2019s congressional delegation, the State Chamber of Oklahoma called the current system unfair to brick-and-mortar stores, The Oklahoman<\/em> reported<\/a>.<\/p>

And early this year:<\/p>\n

Oklahoma City Mayor Mick Cornett told President Barack Obama at a White House meeting that he should get behind federal legislation to help cities get sales tax revenue; Cornett estimated Oklahoma City loses between $10 million and $15 million a year, The Oklahoman<\/em>\u2019s Chris Casteel reported.<\/p><\/blockquote>

Brick-and-mortar retailers are among the biggest backers of such efforts. In Oklahoma, the so-called \u201ce-fairness\u201d effort has picked up steam among local business owners who complain that Internet companies that don\u2019t collect sales taxes have an unfair business advantage.<\/p>\n

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