Uncollected Sales Tax

For a valid reason that escapes us, Missouri is losing out on realizing hundreds of thousand of dollars in uncollected sales taxes. It’s because the state is doing nothing to collect sales taxes from Internet purchases.

This is unfair to thousands of businesses in Missouri that collect sales taxes for the state. It also gives an unfair advantage to businesses that advertise and sell over the Internet. The state needs revenue, especially for economic development and education. This is a source of revenue awaiting action by Missouri’s leadership.

From Gov. Jay Nixon on down, why doesn’t some state official take this issue and run with it? Why doesn’t the leadership in the Legislature take action?

Researchers at the University of Missouri Truman School of Public Affairs estimate that the state loses about $468 million per year by not collecting sales taxes on purchases made over the Internet. All of our local taxing entities would benefit.

The state misses the money in part because it hasn’t signed onto a 1999 agreement to simplify and encourage voluntary collection of sales taxes by e-commerce retailers. About  half the states have signed the agreement. The U.S. Supreme Court has ruled that states cannot levy sales and use taxes on businesses that don’t have a store, office or another type of physical location in the state. Missouri consumers technically are required to pay taxes on purchases from outside the state, but that rule is ignored for the most part.

The National Governors Association and the National Conference of State Legislatures created the Streamlined Sales and Use Tax, which simplifies sales tax collections across jurisdictions that have varying sales tax rates, such as is the situation in Franklin County. About 1,400 retailers voluntarily collect sales taxes under the agreement. The researches said the longer-term solution is for Missouri legislators to lobby Congress to pass federal legislation to correct this unfair situation.

There is a bill, the Marketplace Fairness Act, introduced by Sen. Roy Blunt of Missouri and Sen. Richard Durbin of Illinois, that would give states additional power to collect sales taxes on Internet purchases. The report by the researchers said the act would “level the playing field” for Missouri-based sellers forced to compete with online vendors from outside Missouri.

This is such a clearly unfair situation crying out to be corrected that we don’t understand why lawmakers don’t advance and pass the Blunt-Durbin bill. This unfairness must not be allowed to continue.