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Online Sales Costs Mississippi Millions

By Jeffrey Hess | Published 05 Nov 2010 03:39pm | comments

Mississippi is losing more than 117-million dollars this year in on-line sales tax revenue. MPB's Jeffrey Hess reports that collecting that money is much harder than it sounds.

According to a University of Tennessee study, that amount jumps to 134-million next year.

Right now, the state has no way to collect sales tax from merchants who ship goods into the Mississippi.

“There was a decision by the U-S Supreme Court back in 1999 that makes it illegal for us to require out of state retailers to collect our sales tax if they don't have a nexus here which is physical presence in Mississippi,” said Mississippi Tax Commission spokesperson Kathy Waterbury.

To be part of a national online tax system, retailers would have to keep up with the sales tax rate in every U-S county.

“And it would create an enormous burden on the tax payers who have to report. Because no longer would they be reporting just based on their base location, they would be reporting by where the sale took place,” Waterbury explained.

However, it’s not just the state losing money, businesses with physical store fronts are becoming the show room for online retailers.

“But I will tell you we just hear from retailers all the time that they have people come in and look around at their store and then just go buy something on line,” said Blake Wilson with the Mississippi Economic Council.

Wilson argues that online businesses have the privilege of selling in Mississippi, so the burden to pay the taxes should be on them.

“Or go to something which is just grossly unfair and have citizens pay that tax. Citizens can't keep up with that,” Wilson said.

Mississippi is one of 44 states in an organization called the Streamlined Sale tax, which is trying to coordinate states to simplify their sales tax system, but to comply with their standards Mississippi would have to re-write its entire sales tax code.

Wilson thinks it is clear that that conglomeration is not working and wants a nationwide tax for on-line retailers, so they can pay a flat rate no matter where they ship.

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