Tax internet sales
People who own stores in Mississippi, drive on roads, send their children to public school or use any other state service will benefit from a recent Mississippi Department of Revenue decision.
It filed notice that starting December 1 it will collect sales tax from online stores without a physical presence in the state who have sales of at least $250,000 per year in Mississippi.
That will help restore balance to a system that unfairly gave internet retailers a seven percent price advantage over their brick-and-mortar competition.
Internet retailers contribute nothing to Mississippi communities. They don’t employ Mississippians. They don’t own land or buildings here so they don’t pay property taxes. They don’t sponsor youth sports teams. They don’t join the chamber of commerce. And up until recently, they didn’t pay the sales taxes that their competitors are required to extract from customers.
That’s un-American. The ideal of this country is to allow a fair system where everyone operates under the same laws. Yet internet companies have avoided paying sales tax through an obscure 1992 U.S. Supreme Court opinion that said out-of-state merchants aren’t required to collect it.
Twenty-five years ago, U.S. Supreme Court justices nor anyone else could have anticipated what internet retailing would become. That ruling is hopelessly outdated and will eventually be overturned. The Associated Press said Alabama, Tennessee, South Dakota, Massachusetts, Vermont and Wyoming are already challenging it, and by far the largest online seller, Amazon.com, has seen the writing on the wall and been proactive by agreeing to collect sales tax already in Mississippi and other states.
Even from other websites, the sales tax is still owed, even if the company doesn’t collect it; the buyer is supposed to keep up with how much they purchased and cut a check to the state. That makes tax cheats out of just about everyone who shops on the internet. The AP reported Mississippi only collected $250,000 in 2016 from consumers via that mechanism out of an estimated $100 million to $150 million per year that should be paid. That’s far less than one percent of what should be paid.
The decision by state Revenue Commissioner Herb Frierson helps collect the money that is already owed the state by simply requiring online stores to do the same thing as all other stores: Collect the sales tax on behalf of the state at the point of sale.
At the same time, it helps local stores who have been hammered by internet competition. How is that a bad thing?
Spare us the righteous indignation about defying a U.S. Supreme Court ruling unless you’re also willing to do the same on abortion. That’s another area where the nation’s high court made an incorrect decision, and even though that decision remains the law of the state, it’s appropriate for states to challenge to get it overturned. The same applies to online sales tax.
Even if Frierson’s decision causes a court challenge, which is expected, it’s a fight worth having.