Curious Louis: Capturing state sales taxes on online purchases? In Missouri, it's mostly on you
Amazon began capturing state sales tax for purchases in Missouri this year.
The voluntary move preceded the online retailer’s announcement in July that it would open a distribution center in Hazelwood. Without a physical presence in the state, many online retailers don’t charge a state tax to Missouri customers.
Instead, the onus is put on consumers.
Missourians, in theory, are supposed to keep track of their purchases throughout the year and pay taxes on online purchases of more than $2,000.
Hardly anyone does, according to Amy Blouin, executive director of the Missouri Budget Project.
“The fact is that no one knows about it,” she said.
For years, the Missouri Budget Project, a progressive think tank, has advocated for capturing Missouri’s 4.225% sales tax in online purchases, saying the state is foregoing millions of dollars in revenue. Blouin said other states are doing so through what’s called the Streamlined Sales Tax, which allows retailers to automatically calculate, capture and remit the tax.
“It’s been passed in 24 states, including most of our neighbors,” she said. “Iowa, Arkansas, Kansas, Tennessee and Oklahoma have all adopted streamline.”
Blouin said there is growing support in Missouri because it would level the playing field between online retailers and brick-and-mortar stores. Sen. Wayne Wallingford, R-Cape Girardeau, has sponsored legislation in recent years, including a bill that passed the Senate Ways and Means Committee in the last session.
Even if Missouri lawmakers passed the Streamlined Sales Tax, it would still be up to online retailers whether or not they want to participate. It’s not compulsory.
South Dakota passed a law earlier this year that attempts to force e-retailers to capture sales taxes. The state has since sued four big online retailers in a lawsuit that’s expected to reach the U.S. Supreme Court.
David Overfelt, executive director of the Missouri Retailers Association, would like to see something similar in Missouri, but he said it’s likely to be an uphill battle in the courts.
“This argument and problem has been going on way before the internet,” he said. “There were magazine sales before that. This has been going on for decades.”
Overfelt welcomes Amazon’s voluntary move to capture state taxes. But one St. Louis Public Radio listener (through Curious Louis) wanted to know whether the online retailer will pay any local taxes.
The answer? It depends on the jurisdiction, said Overfelt. Voters in jurisdictions that have approved a use tax, or a tax on items shipped in from outside the government boundaries, will capture the local tax.
It’s something Overfelt said he’d like to see put in place in more municipalities to make it more equitable between retailers.
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