In my first filing yesterday, I discovered that Florida residents are required to pay a 6 percent use tax on all retail purchases they make over the Internet with companies outside the state, unless the retailer includes the tax in the purchase.
You're supposed to voluntarily report these purchases and submit the tax quarterly, removing one of the best perks of online shopping -- the lack of a sales tax.
A TurboTax FAQ claims that most states demand use taxes from their citizens, but enforcement has been lax until so many people started shopping over the web, mail, and television:
States generally impose a use tax to collect taxes from their citizens who buy items from an out-of-state vendor who is not required to collect sales tax for that state. The tax insures that the state gets its money from all purchases by its citizens, whether they buy locally (in which case they must pay the sales tax) or from out-of-state sellers (in which case the citizen often owes the use tax).
I'd be amazed if even 1-in-1,000 people was paying this tax, though a recent Forbes article predicts that cash-strapped states will increase enforcement.
I shop online through a single credit card, so I downloaded my first-quarter purchases from Advanta in Excel format, paying an extra $7.83 to Florida for a new PalmPilot cradle, Kahlon laptop battery, and Teen Spirit: The Tribute to Kurt Cobain.
Ohio started pulling this back in 2000, with predictable results: even after 3 years of "requiring" use taxes for Internet purchases, 2003 filings saw only about 47,000 taxpayers in that state actually complying.
Grand total raked in from those people? $2.2 million -- about $500 million less than the state figures it would earn if everyone complied.
(It's worth noting that since use taxes are based on voluntary reporting, even those 47,000 may be under-reporting the amount they actually spent online -- so true compliance may be even lower than that.)
This sort of thing strikes me as counterproductive -- it brings in negligible revenue, and encourages contempt for the law. They should either pass a real Internet sales tax or strike the use tax altogether.
Here in North Carolina there was some minor news about the Governer's proposed sales tax changes, and I found out about this:
Streamlined Sales and Use Tax Agreement
One of the goals of bringing sales taxes into alignment is to make it possible (required) for Internet retailers to charge for sales tax.
why would anybody volunteer to give their (already taxed) money to the government?
WILLC2, because they have a conscience and wish to do the right thing!
how is it the right thing to give your already-taxed money away?
It doesn't seem right to me.
It is just plain wrong for the state to require citizens to pay sales tax on out of state purchases, make legal provision to hold them liable for not participating but not tell the citizens anything about it. I believe that if the voters were suddenly made aware of this sales tax requirement, they could convice the Florida sate government officials to change this law.
This is very similar to the intangible tax that Florida put on savings accounts. In about 1992 the state notified me that I owed intangible tax, that they knew I did after examining my Fed income tax returns and that I could be in trouble. It was threatening and intimidating letter. I was not in the know, so I called and asked how much they claimed I owed. (The state employee said that they had no access to any of my personal tax information, and did not know if I owed anything. When I filled out the state form, I found I owed nothing.) When I asked around and found that noone else knew about Florida's intangible tax. Like the bullying notice that I recieved in 1992, any of us could receive notice to pay "our fair share" of state sales tax "owed" with interest! That is a scary thought.
As far as sales tax on internet purchases, the state must either enforce it or delete it. I think they should delete it. I believe that politicians would eliminate it if they heard from enough of their constituents. I am going to write in to my state representative and senator. I hope that you write to yours too.