Indiana bill would force tax collection on internet sales

Online shoppers have been put on notice.

Cyber Monday 2012 may have been the last where Indiana customers of internet retailers easily avoided paying the state sales tax.

“I think all businesses say hey, we’re fine with competition, let’s just make it fair competition,” said Ind. Rep. Thomas Dermody, (R) LaPorte.

Rep. Dermody has authored a bill that would force some online retailers to collect the state sales tax at the point of purchase.

Under current policy, consumers are supposed to report and pay “use” taxes from online purchases when they file their income tax return. Rep. Dermody says estimates show that only one percent of Hoosiers do so.

“I have a little problem with online sales because I am a brick and mortar store, I want people to come here and shop here,” said Peg West of Threadbenders Quilt Shop in Michigan City. “I feel it's a big competition factor because between shipping and sales tax people are about even. It’s about a wash to shop online, but if they had to pay shipping and sales tax, I think they'd be more likely to come to me.”

There’s another strong reason why some feel this is the year the Indiana General Assembly may be willing to force the issue. The nation’s largest online retailer, Amazon dot com agreed to voluntarily collect the Indiana sales taxes—but not until 2014.

Some in the legislature were upset to learn that the company gave better deals to some other states.

“We think it’s time to move up the deadline, we've seen that Amazon has made agreements with other states, that are sooner deadlines than what they agreed to with Indiana, so we felt it was time to move that deadline up to July first, 2013,” said Rep. Dermody. “We can’t let another season go by, the school season, the Christmas or holiday season go by without allowing our brick and mortars to compete with those online companies.”

While the bill in question targets Amazon, it would apply to other online retailers that had annual sales of at least $10,000 and had some physical presence in the state, such as a retail store or warehouse.

Estimates show that the state is now losing as much as $200 million per year in sales tax revenue through internet sales.

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