Our View

Our View

Can’t miss out on any of those online tax dollars!

OK, all you savvy online and Amazon shoppers, what justification is there in being charged state sales taxes for purchasing items from businesses that don’t have any presence in the state but traveling just south of Crittenden County to Southaven, Ms. to avoid paying Arkansas’ higher sales tax rate is perfectly acceptable?

Well, it now appears our state lawmakers, who just passed legislation lowering taxes on the state’s poorest, are now on tap to force Internet sellers, such as Amazon, to collect sales taxes on customers’ purchases in Arkansas regardless of whether or not they have a presence in the state.

Let’s not be led to believe that this is all being done to simply protect the so-called “brick and mortar” business in Arkansas when in reality it is a snatch-andgrab tactic to collect millions of dollars to address a state spending problem. Yes, it is true that forcing these on-line Internet sellers to collect Arkansas taxes on the items sold to Arkansans will create a better level playing field but let’s be honest and say that all major retailers located in Arkansas also have profitable e-commerce sales.

It is expected that this snatch-and-grab effort will generate anywhere from $32 million a year from Amazon alone to $100 million a year. But, Sen. Bart Hester, R-Cave Springs, who voted against the legislation, said “we don’t need more revenue as a state. We have a spending problem, not a revenue problem.”

The Washington, D.C.-based Americans for Tax Reform organization urged lawmakers to oppose the bill and said, “Requiring businesses to remit taxes to a state where they have no physical presence is simply unfair, as out-of-state employers and their employees will not use or benefit from any public service, program or project funded by Arkansas’ sales tax.”

The organization also pointed out this legislation and other efforts by state and local tax collectors to reach beyond their borders presents constitutional concerns as well.

So then, how do these political money grabbers enforce this legislation? Well, the state may file a lawsuit in circuit court against any company the state believes meets the criteria of the bill. The finance department said it didn’t know the revenue impact from out-of-state sellers volunteering to begin tax collections because of SB140. The interesting aspect of what lawmakers are doing is the fact existing U.S. Supreme Court case law provides that an out-of-state or remote seller must have “nexus,” meaning a physical presence in a state, to be required to collect that state’s sales and use taxes on in-state purchases.

Such a high court case law apparently is meaningless to these politicians in light of the fact that complementary legislation to the Senate bill is pending action which we believe will pass.

From what we understand this legislation would require out-of-state retailers that don’t have a physical presence in Arkansas and don’t collect Arkansas sales and use taxes from their customers to notify their Arkansas customers at the time of purchase that tax is due and that the state requires the filing of a sales-and use-tax return. Now, just how many of these customers are going to actually say, “Oh, let’s get that tax in the mail today.”

It would certainly be interesting to hear from our readers as to their opinion on this legislative tax action. Let us know.