N.C. Trying to Cash in on Internet Sales

North Carolina joins more than a half dozen other states in putting a new line on state tax returns this year.

The state has been trying to collect what is called a "use tax" since 1990. The tax covers all out-of-state purchases made by phone, catalog, and now, the Internet.

TheNorth Carolina Department of Revenueestimates online shopping will cost state and local governments up to $140 million in sales taxes this year.

Line 16 of 1999 N.C. tax returns titled "Consumer Use Tax" will require consumers to calculate how much they spent for goods online, plus shipping costs, and pay 6 percent in sales taxes on the total.

"Since the other states were going to the line on the form, the General Assembly considered it this year and decided to go ahead and make that move and put it on the return," says Charles Collins of the N.C. Sales and Use Tax Division.

Sale and use taxes have been explained in tax forms since 1990. Now, since it is on the return you sign, reporting is required.

"The taxpayer should make a best effort at estimating what their liability is if they do not have receipts, or go back and go through those credit card transactions and determine what the liability should be," advises Collins.

The requirement does away with one online shopping benefit.

"It is a pretty big surprise. I think one of the advantages everyone had thought is that you did not have to pay the taxes," says online shopper Kimberly Lewellen.

Collins says most taxpayers will make an honest attempt; audited taxpayers' credit card records could be checked.

Generally, e-shoppers are critical of paying taxes on Internet purchases. A Raleigh store owner thinks the change will make little difference.

"I think people that are going to buy online are going to buy online because of the convenience whether they get taxed or not. They come in here because of the customer service," says Luella Harris.

The Federal Government is keeping a hands-off attitude about taxing Internet commerce for the time being. It is a hot topic among presidential candidates, and most government-types at all levels.

There are some who say the Internet may do away with sales taxes because successfully levying taxes on e-commerce could be very difficult. A product could be made overseas, you order it from an out-of-state vendor, and it is shipped directly to you from offshore.

For now, the best thing to do is keep your records.