One advantage of shopping online is that purchasers often don’t have to pay sales taxes. That could change in the Hoosier State if two Indiana legislators get their way.
State Rep. Ed Delaney (D-Indianapolis) and State Sen. Luke Kenley (R-Noblesville) are urging Congress to give states the ability to charge consumers sales tax for items they purchase from online retailers such as Amazon.com.
Under a 1992 U.S. Supreme Court ruling, retailers must collect sales taxes only if they have a physical presence in the state. Retailers such as Amazon, which does not have physical stores, are not required to collect sales taxes. Similarly, a candy store in Indiana does not have to charge its Illinois customers who purchase chocolates online.
‘Main Street’ Act
However, U.S. Rep. William Delahunt (D-MA) in 2010 introduced the Main Street Fairness Act, which would require retailers to collect state sales taxes on most Internet and mail order purchases.
“The bill is designed to help states retrieve billions of dollars in sales tax revenue that are owed but currently going uncollected,” Delahunt said in a statement. He added the money would help generate new revenue for state governments without having to “raise new taxes.”
Shopping Mall Owner’s Support
Delaney says he began supporting Delahunt’s bill after speaking with David Simon, CEO of Indianapolis-based Simon Property Group, the country’s largest shopping mall developer. The Simon family also owns the Indiana Pacers of the National Basketball Association.
Simon told Delaney his company’s shopping mall tenants are at a disadvantage because they must charge sales taxes.
“We’re looking for fairness in our tax system. We need to level the playing field tax-wise,” Simon said in a speech to the Economic Club in Indianapolis.
Kenley has been lobbying members of Indiana’s congressional delegation to support the Main Street Fairness Act. He said it has been a challenge getting them to do so openly.
Paying sales taxes on Internet purchases may not sit well with online shoppers or online retailers.
‘Will Probably Buy Less’
“I buy a lot of books and prefer Amazon because they offer better discounts than stores do, and they have free shipping,” said Indianapolis resident Jerry Hamilton. “The politicians are all the time saying, ‘You owe this, you owe that.’ If I have to pay sales taxes on everything I buy off the Internet, I’ll probably just buy less.”
Joni Knapp sells antiques and collectibles online after doing away with her bricks-and-mortar store. She said she’s against any efforts to tax Internet purchases.
“I can offer my items on the Internet for a lot less than what I could when I had a physical store because I don’t have the overhead,” Knapp said. “If my customers have to pay sales taxes, I may lose business.”
Nick Baker ([email protected]) writes from Washington, DC.