The Register-Herald, Beckley, West Virginia

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April 28, 2013

States may soon collect sales tax for online buys

Senate bill advances to final vote in May; House prospects uncertain

— Online consumers in West Virginia might see their days of Internet shopping tax-free across the planet come to an end.

That, however, depends on the House of Representatives, after the U.S. Senate agreed 63-30 Thursday night to advance a measure that would force merchants to collect the sales tax from buyers in states where the purchases are made.

A final Senate vote doesn’t come until May 6.

Already, state lawmakers have moved to crack down on noncollection of sales taxes in a bill that cleared the Legislature to collect the levy, but only if the online transaction occurred within West Virginia’s borders.

For instance, a buyer in Beckley would have to pay taxes for merchandise bought via computer from a firm in Parkersburg.

Sen. Jay Rockefeller, D-W.Va., a strong advocate of the so-called Marketplace Fairness Act, says the burden is on consumers to figure the taxes they owe and pay them, but most don’t since there exists no obligation on the part of the online companies.

“West Virginia brick-and-mortar businesses are collecting and remitting the tax to the state,” Steve Roberts, president of the state Chamber of Commerce, said Friday.

“Online retailers from anywhere else in the world — China or anywhere else — are not. It puts our West Virginia merchants at a disadvantage to have to pay a tax that Internet sales companies don’t have to pay. Our concern is that our small businesses are up against an uneven playing field.”

Roberts said he understands that some larger Internet companies favor passage of the proposed federal law, since it contains a provision that mandates simplification of tax rules within the 50 states.

This would make it easier for all in the business community to “know what is owed and how to turn it in,” the Chamber president said.

Roberts said about 60 percent of all workers in West Virginia are employed by a small business concern.

While he couldn’t say if any firms have actually been forced out of business because of the competition with online sellers, Roberts said the state is losing between $60 million and $80 million annually in consumer sales taxes.

To put that in perspective, the high end of that estimation is roughly what the West Virginia Turnpike takes in each year from tolls.

“It’s certainly possible that this creates a serious economic disadvantage for a West Virginia business that’s trying to compete with an Internet retailer,” Roberts said of the disparity in tax collections.

Roberts said the state Chamber agreed to join a coalition of the U.S. Chamber of Commerce, the National Association of Manufacturers and chambers in other states to support the legislation.

Even if the bill survives the Senate, Roberts said it could face some tough sledding in the House, adding, “It faces a little bit of an uncertain future in the House.”

— E-mail: mannix@register-herald.com

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