Local Politics

N.C. pushes to collect tax on Web sales

Posted January 13, 2009
Updated March 9, 2009

North Carolina is among a growing number of states that are simplifying their tax codes in an effort to begin collecting sales tax on Internet sales.

Most Internet sales are tax free since the U.S. Supreme Court has ruled that states can't force businesses to collect tax on online sales unless it has a physical presence in a customer's state.

Should Internet sales be taxed? Should Internet sales be taxed?

States that are struggling with budget deficits during the economic downturn are looking to reverse that stance and tap into another source of tax revenue. North Carolina, for example, loses an estimated $300 million in taxes on Internet sales, and its budget is projected to be more than $1 billion in the red this year.

The state for years has tried to collect taxes on online purchases through the honor system – a line was inserted onto the state tax form to report those purchases – but Department of Revenue officials have acknowledged that the system hasn't worked.

E-commerce accounts for about 8 percent of the nation's retail sales – an estimated $204 billion last year – and is one of the few retail segments that has grown during the recession.

"I bought a TV over the Internet. I have bought a number of things on eBay," shopper Ray Allen said.

Andy Pittman, owner of Jeffreys Appliance, said the sales tax differential is unfair to businesses like his.

"It's definitely frustrating for any business owner," Pittman said. "That 6.75 percent sales tax can make a difference, so it can tip a consumer to buy online."

North Carolina is among 22 states participating in the Streamlined Sales Tax Governing Board, which is lobbying to collect taxes on online sales if states can create a uniform tax system. Many retailers have also signed onto the effort.

Second District Congressman Bob Etheridge said he expects uniform online sales tax legislation eventually will come before his Ways and Means Committee.

"It's unfair to the people who have a brick-and-mortar building in North Carolina to lose to someone in another state when they aren't getting the revenues collected," Etheridge said.

Allen said he thinks states get too greedy when they talk about including tax on to every Internet purchase.

"It's just another chance to tax, like anything else, and we have enough taxes already," he said.

Pittman said he wants a level playing field for his business, but he's not so concerned about helping the state collect taxes. A state sales tax holiday on energy-efficient appliances in November marked the three biggest sales days at Jeffreys Appliance, he said.

"It was a huge deal for us," he said.


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  • killerkestrel Jan 15, 2009

    Folks keep complaining as though it is a new tax, but it is one that you are suppose to be paying already, but almost everyone doesn't! Guess we are all guilty of tax fraud.

  • ConcernedNCC Jan 14, 2009

    I don't see why the sales tax would tip the scale toward the internet sales. They have shipping to pay which is a lot more in most cases.

  • Boot-the-DC-Tyrant Jan 14, 2009

    In an era of very high layoffs, high food and retail prices, home forclosures at an all time high, and gas prices going back up after finally falling from the most ridiculous price gouging scam in history, all we hear is that we need higher taxes and create new taxes and raise the gas tax to pay for this and that.

    Yeah, that will definitely get the people's spending confidence up and the econmy back on track. Good job NC.

    Who the heck voted Bev Perdue anyways?

  • NeverSurrender Jan 14, 2009

    "I don't see why everyone is soooo shocked....all Dems ever think about is TAX and then they SPEND it on various pork projects that don't benefit Joe the Taxpayer! You guys elected BEV, Chairman O, Hagan, Price, etc, etc, SO you and unfortunately me are going to pay for it big time! When will you folks ever learn!"


    The Republicans haven't exactly covered themselves in fiscal glory with the huge deficits they've tended to run in their administration.

    Whether you like it or not, that deficit spending is an even worse tax than the explicit taxes because eventually the piper will have to be paid. Who is going to do it? Our children and grandchildren...and likely a couple of generations beyond them.

    Unless you fancy the US going the route of hyperinflation...ask Robert Mugabe of Zimbabwe how well that's working out for his country when they're printing 50B Z$ notes that can't even buy a loaf of bread!

    Politicians of all parties are addicted to our dollars like crack whores.

  • leo-nc Jan 14, 2009

    Great, another way to take money out of OUR pockets and give it to the state who can't manage a budget. That's all we need. And hey, lets do it at a time where everything costs a fortune and we have very little money! Good job NC.

    How about cutting spending? I just don't get why they always want to raise taxes but never cut spending. RIDICULOUS

  • dogman1973 Jan 14, 2009

    I don't see why everyone is soooo shocked....all Dems ever think about is TAX and then they SPEND it on various pork projects that don't benefit Joe the Taxpayer! You guys elected BEV, Chairman O, Hagan, Price, etc, etc, SO you and unfortunately me are going to pay for it big time! When will you folks ever learn!

  • Garnerwolf1 Jan 14, 2009

    C'mon people, keep up. First, NC has been part of this streamlined effort for about 4 years now. Second, there is nothing that says states can't tax items coming from other states. It's done now, has been done since the sales tax was first imposed, and has been held up in courts over and over and over again. It's called the Use Tax. What states can not do (unless Congress overturns it) is put a sales tax on shipments into a state for which the seller has no physical presence. By the way, the streamlined effort for which you speak is voluntary, and some of the biggest retailers in the country are on board, incl WalMart, etc. Part of it is lobbying Congress to overturn the court cases that prevent the imposition of the sales tax. But again, these purchases are still legally taxable through the Use Tax. If you buy something online, and the seller does not impose the tax, you are legally required to remit it yourself. If you don't believe me, look it up yourself.

  • G-man Jan 14, 2009

    They tax my money when I make it. They tax me when I spend it. The product I'm purchasing has already been taxed a half dozen ways before it's even available for purchase. And these idiots in government wonder why the people are trying hang on to THEIR money.

  • Boot-the-DC-Tyrant Jan 14, 2009

    Well time to turn to the "third world"ish black market type of sales!

  • bs101fly Jan 14, 2009

    pass that stupid idea and I for one will STOP, END, HALT all sales online.
    The clients can just come pay for it in person if they want it and if they don't WHO CARES!