Walker pushed to call for online sales tax law
The state Department of Revenue estimates that Wisconsin consumers don’t pay about $150 million a year they owe in sales taxes on online purchases—a number that retailers say is soaring as more consumers buy online. That’s $150 million that the state treasury doesn’t get each year.
What would $150 million a year buy? One example: It would more than offset the projected mid-2013 deficit in the state Medicaid program, which provides health care to one in five Wisconsin residents who are poor, elderly or disabled.
Retailers nationally and many state leaders, including other Republican governors, are increasingly pushing Congress to pass the so-called Marketplace Fairness Act (MFA), which would require online retailers such as Amazon to collect the sales tax of the buyer’s home state. Amazon had total sales of $48 billion in 2011, a one-year increase of 40 percent.
The Alliance of Wisconsin Retailers wants Republican Gov. Scott Walker to join what it says is the growing chorus demanding that Congress pass the fairness act. Committees in Congress are considering that change.
It’s a “jobs issue,” said Alliance lobbyist Scott Stenger.
“Gov. Walker has been working hard to attract new jobs to Wisconsin and maintain existing jobs provided by Wisconsin employers,” Stenger added. “Support of MFA puts Wisconsin employers on a level playing field with out-of-state companies who don’t invest or provide jobs in Wisconsin.”
Now, uneven sales-tax enforcement laws nationally have “government picking winners and losers,” Stenger added. He said a National Conference of State Legislatures estimate in 2010 put the annual loss of sales taxes to Wisconsin even higher, at about $174 million.
Stenger said the A-list of Republicans who want Congress to act includes New Jersey’s Chris Christie, Louisiana’s Bobby Jindal, South Carolina’s Nikky Haley, Indiana’s Mitch Daniels and former Mississippi Gov. Haley Barbour. Christie, Jindal and Haley came to Wisconsin to help Walker survive a June 5 recall election.
Stenger said alliance members are frustrated that Walker, a darling of the Republican Party nationally since surviving the June 5 vote, won’t add his name to that list.
But Cullen Werwie, Walker’s press secretary, said—for now—the governor expects the state Revenue Department to enforce the law that requires the 5 percent sales tax to be paid on online purchases, and he expects Wisconsin consumers to follow that law.
“The law is clear in Wisconsin: Sales tax is due on items purchased while in the state,” Werwie said in a statement.
“The Department of Revenue will continue to help consumers comply with the law,” the Walker aide added. “Gov. Walker remains committed to enforcing the law. The Department of Revenue will continue to work to ensure compliance with current law.”
Given Walker’s refusal to call on Congress to act, the state Revenue Department can only explain the progress it has made on the issue.
“This is an issue to be decided at the federal level,” spokeswoman Stephanie Marquis said. “Congress can pass legislation that would require out-of-state retailers to collect sales tax the same as in-state retailers.”
Under Wisconsin law, if a consumer does not pay sales tax on a purchase from an out-of-state retailer when making the purchase, the consumer is required to pay the sales tax when filing income tax returns.
Since 1988, the state Revenue Department has included a line on the personal income tax form requiring taxpayers to declare any unpaid sales and use taxes.
DOR took enforcement a step further on the 2011 tax form, requiring taxpayers who declared that they had no sales or use tax due to also check a separate box—a personal reaffirmation that it was true, Marquis noted.
Whether it was making taxpayers say “I owe nothing” twice, or the growing controversy nationally over how much cash-choked state governments are losing, Wisconsin taxpayers voluntarily paid $3.97 million in sales taxes for online and catalog sales when they filed their 2011 taxes.
That $3.97 million was more than double the $1.6 million taxpayers voluntarily paid in 2010, Marquis said. In 2009, taxpayers declared $1.3 million in unpaid sales taxes.
Although taxpayers volunteered that they owed $3.97 million in sales tax on those purchases in 2011, state officials say the number should have been much higher. At least $146 million more.
Steven Walters is a senior producer for the nonprofit public affairs channel WisconsinEye. This column reflects his personal perspective. Email email@example.com.