OLYMPIA, Wash. – Cyber Monday was expected to generate $1.5 billion in internet sales nationwide. That’s great for on-line retailers, but not so good for tax coffers in states like Washington and Idaho. That’s because many cyber retailers still don’t collect sales tax. And Congress is unlikely to close that loophole anytime soon.
The Washington Department of Revenue estimates state and local tax coffers will miss out on $1 billion over the next two years due to internet sales. That’s roughly the size of the current state budget shortfall. Idaho is expected to forgo $46 million this year alone because of online purchasing.
From the pandemonium of Black Friday to the keyboard tapping of Cyber Monday, Americans are spending big in advance of Christmas 2012.
But fast growth in online shopping is a source of heartburn for state leaders like Washington Governor Chris Gregoire. The Democrat wants Congress to act in the current lame duck session to require online retailers to collect and remit sales tax to the states.
Washington Congressman Adam Smith says a vote is possible, but not likely.
“I would describe it as a tough pull to see that the leaders in both the House and Senate would be willing to go after this.”
The proposal has bipartisan support. Idaho Governor Butch Otter, a Republican, considers it a matter of fairness to brick and mortar stores. But in Oregon where there is no sales tax, Democratic Senator Ron Wyden says requiring online retailers to become tax collectors will “kill … entrepreneurship and job creation.”
The Washington Department of Revenue estimates state and local tax coffers will miss out on $1 billion over the next two years due to internet sales. That’s roughly the size of the current state budget shortfall.
Collecting Sales Tax Online (US Small Business Administration)