Pennsylvania hopes to cash in on ‘Cyber Monday’ by collecting sales tax

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The Sierra Trading Post Fulfillment Center sits stocked in preparation for Cyber Monday online orders on Tuesday afternoon, November 13, 2012 in Cheyenne, Wyo. (AP Photo/Casper Star-Tribune, Kyle Grantham)

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November 27, 2012

Pennsylvania hopes to cash in on ‘Cyber Monday’ by collecting sales tax

Eric Boehm PA Independent The Tribune-Democrat Tue Nov 27, 2012, 04:17 PM EST

HARRISBURG — Pennsylvanians will now pay taxes for all online purchases.

Beginning this year, Pennsylvania toughened enforcement of a long-standing law requiring businesses with a physical presence in the state to collect sales taxes from online purchases.

That means their customers are going to be charged that 6 percent in extra taxes when they shop online. The businesses will collect and send the tax revenue to the state.

RING IT UP

Pennsylvania hopes collecting online sales taxes will help brick-and-mortar businesses from becoming antiques, but critics of the new policy say it’s not about fairness at all.

Secretary of Revenue Dan Meuser told PA Independent on Monday that it was an issue of fairness for brick-and-mortar businesses in the state that were being undercut by online sellers who could offer lower prices because the 6 percent sales tax was not included.

“The tax wasn’t being enforced equitably, fairly or uniformly,” Meuser said.

Prior to the Internet age, it was a simple matter to determine whether a business had to charge the sales tax — it was either located in the state or not.

Today, it’s not so simple.

The Department of Revenue estimates Pennsylvania misses out on $225 million in unpaid sales taxes each year. With the new enforcement measures, they hope to collect about $50 million of that total, Meuser said.

Steve DelBianco, executive director of NetChoice Coalition, said the push to collect online sales will hurt some online advertisers and other clients of big sellers like Amazon, but will not drive consumers back to brick-and-mortar stores.

“I think you’ll learn that it had no benefit to shopping malls and Main Street,” he said. “Consumers buy online for choice, convenience and lower prices, not to avoid paying sales taxes.”

NetChoice “is a coalition of trade associations, eCommerce businesses, and online consumers, all of whom share the goal of promoting convenience, choice and commerce on the Net,” according to its website.

But Pennsylvania officials are hoping Congress will act to change tax laws at the federal level to ensure that businesses pay sales taxes on all purchases, even those in other states, which would eliminate the confusing and difficult-to-enforce laws on the books.

“These taxes by law should be paid, and the best way to do it is to have it collected and remitted from the source,” Meuser said.

Congressional action would solve the piecemeal tax collection issue, but could end up requiring businesses to be accountable for sales taxes in thousands of jurisdictions across the nation, making life difficult for small business owners, DelBianco said.

Through the end of October, sales tax collections in Pennsylvania were lagging about $73 million, or 2.4 percent, below estimate.

Contact Eric Boehm at Eric@PAIndependent.com and follow @PAIndependent on Twitter