Knoxville – Commerce officials from Tennessee and 38 other states seek to reduce the sales tax advantage Internet retailers hold over their brick-and-mortar competitors.
The Streamlined Sales Tax Project aims to simplify sales tax collection laws around the country in an effort to levy sales tax collections on e-commerce.
University of Tennessee economist Matt Murray said Tennessee loses sales tax revenue when online retailers fail to require people to pay taxes on their purchases.
“Often Tennesseans are not asked to pay sales tax by the online retailer when they make the transaction,” Murray said, “but they remain liable for state sales tax. The reality is that most people don-t make those payments to their state government.”
Murray said online retailers blame complicated collection procedures and requirements for the inability to expand their tax collection role.
Another factor is that most Internet commerce is between businesses, rather than from businesses to individuals, Murray said.
“Many of the sales tax payments that otherwise would be made by businesses to the state would not be made if the transactions are completed on the Internet,” Murray said.
Members of the sales tax streamlining project said large states will have to simplify their sales tax rules before Internet businesses can be expected to collect tax revenues.