Local Politics

New state revenue chief vows to collect sales tax on online buys

Posted November 30, 2010 6:44 p.m. EST
Updated November 30, 2010 7:07 p.m. EST

— North Carolina Revenue Secretary David Hoyle is on a mission to collect the sales tax on purchases North Carolina residents make from online retailers.

Under federal law, Internet companies aren't required to collect sales tax unless they have a physical presence in a state. A study by the University of Tennessee estimates that North Carolina will lose $186 million in revenue this year because online purchases didn't include sales tax, and researchers said the amount is expected to grow to $237 million by 2012.

With the state facing budget deficit of $3 billion to $4 billion next year, Hoyle said he wants that money.

"A lot of these online – well, all of these online retailers – owe us the courtesy of collecting our sales tax," he said Tuesday. "I think some of these companies are building huge liabilities for themselves when they refuse to collect our sales tax."

States have struggled for years with collecting sales tax from online purchases. North Carolina taxpayers are supposed to report uncollected sales tax on their tax returns, but officials say only a small fraction of what is owed is actually paid.

Following a WRAL News investigation, state university leaders vowed to push their online vendors to charge tax. North Carolina also is embroiled in a court battle with online retail giant Amazon to obtain information about its sales to state residents.

"We want to go back as far as we can, go back to when they started shipping stuff into the state," Hoyle said. "We're going to go after it as hard as we can."

Amy Schroeder of Wake Forest said she does about 75 percent of her shopping online because of the convenience. Like many shoppers, she said her buying habits are shaped by savings, whether it's through comparison shopping, sales, shipping costs or sales tax.

"If the price of the purchase is increasing because of the sales tax, then I'll look for sales or we'll table the purchase," Schroeder said.

Still, as much as she likes online deals, she doesn't argue with the state's urge to collect sales tax on such purchases and says she is willing to pay up.

"Why not? It's almost like stealing money. So, let's get it back," she said.