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N.C. Losing Millions in Sales Tax Each Year

Posted October 5, 2007

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— About $200 million to $300 million a year – that’s the estimate on how much North Carolina loses in sales tax each year for online and mail order purchases.

But customers might not realize that if they’re not charged sales tax when they buy, they’re still responsible for it later.

When customers buy online from a company that has a physical presence in North Carolina, they pay sales tax when they click. If it's an out-of state seller, there's no requirement up front, but customers are supposed to pay when they file taxes.

Whether it's a lack of understanding or a wink and a nod, thousands, perhaps millions, of North Carolina consumers are breaking the law.

When people buy an HDTV or washer and dryer set at Garner TV and Appliance, they can count on a nearly 7 percent mark-up courtesy of the state. That's the sales tax they pay.

If people go online, they can find the same products from an out-of-state company. Chances are they won’t get charged for that tax. On a $1,500 dollar TV, that's more than $100 difference.

“It’s not fair to us that we're automatically charging the customer an extra almost 7 percent for the same product you can purchase online and not have to pay that extra sales tax,” said Adam Saad, with Garner TV and Appliance.

Even if people aren't charged, by law they’re supposed to pay that tax later. It’s called the user tax on the state tax form.

“How many people are going to have to do that? If you don't have to do it, you're not going to do it,” Saad said.

Whether buyers don't know or purposely shirk the responsibility, Andy Sabol of the Department of Revenue said the honor system doesn't work.

This portion of the tax form brings about $5 million a year when estimates show it should bring in $200 million to $300 million. That's why Sabol wants Congress to pass laws to require at least the bigger online sellers to collect up front.

“The bottom line is to collect the tax that's legally due from purchases on out-of-state sales,” Sabol said.

“It makes the playing ground more fair,” Saad said.

So, what are the chances the Department of Revenue will go after online sales tax offenders? Leaders said they try to track major purchases, such as cars or boats, but in the vast majority of cases they don't have the resources or access to information.

125 Comments

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  • ampcores Oct 7, 2007

    THE STATE GETS ENOUGH TAX DOLLARS IN PROPERTY TAXES TO TAKE CARE OF BUSINESS. CITIZENS, JUST FIGURE IT OUT YOURSELF. IF NOT, THERE IS ALOT OF STEALING GOING WITHIN.

  • clickclackity2 Oct 6, 2007

    yeah..i agree..who the heck cares. nc will still find ways to raise taxes, even if they were getting every last penny of the "lost sales taxes".

  • Mustange Oct 6, 2007

    TIME FOR A CHANGE , NEW LEADERSHIP IN NC AND DO AWAY WITH THE SO CALLED TAX BASE WHICH IS CORRUPT. LETS DO AWAY WITH ALL THE TAXES AND GO WITH ONE TAX THE FAIR TAX BILL.NO MORE TAX ON ANYTHING EVERYONE PAYS ONE FAIR TAX AND BE DONE WITH IT. ITS WORKS AND IT CAN BE DONE. YOU JUST HAVE TO MAKE IT HAPPEN

  • seeingthru Oct 6, 2007

    I am tired of having it pulled out of my backside every which way they can in NC

  • FE Oct 6, 2007

    Good luck at saying the federal income tax is "illegal." Hopefully you will get a very nice room with a view in Atlanta!

    On a more serious note, in response to most of the well thought-out posts on this topic, I DO have a problem with some of the taxes the NC crooks on Jones Street have created. Look at the state taxes on your telephone bill (even worse on cell phone bills), electricity bill, gas bill, hotel bills, and much more. I find it interesting that the state with the Terry Sanford "food tax" finally made that go away somewhat, but compensated by taxing just about everything else. My favorite is the "it looks like food but it ISN'T!" which applies to some prepared items at the grocery store because you're not buying food but rather a "product." And let's not forget the token cigarette taxes which I'm sure have political connections. (Aside: how many nicotine addicts look at the TAX when buying?)

    It NEVER stops, and we NC citizens are just trapped!

    FE

  • RideItOut Oct 6, 2007

    I love the ???!!?!! things that always appear from the unquestioning "modern patriots". Scream it loud like the TV has taught you to do.
    Look into the fact that the Federal Reserve was created in 1913 by J.P. Morgan, Paul Warburg, and J.D. Rockefeller as a means to create wealth off debt paid to them for them printing our money. It is a most incredible lie that those with interest in it will do everything in their power to keep it from becoming exposed.

    An ending to the federal income tax would free up more $ for the user tax, yippee!

  • Mr. Green Jeans Oct 6, 2007

    Illegal Income Taxes???! Check out this web site before you start believing any of brainwashedhumans's nonsense.

    http://www.quatloos.com/tax_protestors.php

  • RideItOut Oct 6, 2007

    I would be glad to pay this tax if it is legal just as soon as the IRS stops trying to collect the illegal federal income tax. Vote Ron Paul in 2008. One of the first priorities on his agenda is to expose how the IRS is a collection agency for the privately held Federal Reserve. For 3-4 months each year at 40+ hours a week, we toil away for these jokers. The joke is on us.

  • NoToIllegals Oct 6, 2007

    Have most of you called or visited state agencies?

    Most are rude and obnoxious, acting as if they do YOU the consumer a favor by answering your call.

    Even some licensing boards have very rude employees, yet they continue to pay these people when SOME are incompetent, absent, voicemails left and calls NOT returned, losing paperwork, requesting more months later, on vacation most Fridays, etc.

    That is where some of our monies are being wasted. They have to meet that quota, if you catch my drift. Afraid of lawsuits, they hire incompetent people to serve the public's interests, and answer to no one. Write complaints to the General Attorney's office is another waste of time. BBB, another useless waste.....shall I continue??????

    So we diligently hand over OUR money to these imbeciles. If not, we could be jailed. How about jailing these agencies who steal our money by not doing their jobs??????

  • ThatGuyAgain Oct 6, 2007

    That headline should be "NC Citizens Saving Millions Yearly Buying Online." It's not the state's money, it's MY money that the state is confiscating.

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