Lawmakers look to crack down on internet sales tax

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OKLAHOMA CITY – Lawmakers are trying to crack down on internet sales and collect at least $150 million in uncollected state taxes.

Sen. Stephanie Bice (R-Oklahoma City) has authored a bill that will require companies that do not have a presence in Oklahoma to send a letter to its customers who have made purchases online.

That letter will read:

“You may owe Oklahoma Use Tax on purchases you made from us during the previous tax year. The amount of tax you may owe is based on the total sales price of [insert total sales price] that must be reported and paid when you file your Oklahoma income tax return unless you have already paid the tax.”

Currently, the state estimates only 4 percent of people who make online purchases pay the use tax – many of whom may not even be aware there is an additional tax.

“There’s definitely a big loss there, in sales tax collections from internet sales,” said Doug Dowler, Oklahoma City’s budget director.

The last time Oklahoma City tallied its losses, it was short $15 million.

And, in a year when the city expects to reduce its budget by about $11-12 million, that figure is significant.

“Instead of being in a cut, we would be able to add back things,” Dowler said. “This would provide more police officers, more firefighters, be able to fix our roads. These are all the services our citizens need and deserve, and we just don’t have the money to provide as much as we’d like.”

The lack of tax collection is equally painful for small local businesses, like Schlegel Bikes.

Its owner, Steve Schlegel, said his shop suffers when people elect to buy bicycles online and not chip in the use tax, “because the government is basically playing favorites at the moment by directing sales to the internet rather than by giving them an unfair advantage.”

On a $3,000 bike, the 8.5 percent use tax can be a significant chunk of change.

And, though Schlegel said his shop will lower its prices to match the competition, it’s tough to cut profits when other online retailers can get away with simply slashing a sales tax.

“We have to collect that. We’re burdened by law,” he said. “If we buy online, we’re supposed to be self-policing and paying sales tax on those purchases made online. This is not a new tax we’re asking for. We’re just looking for another way to collect that tax.”

The bill has passed the senate and is up for a vote in the house.

Bice thinks the bill will pass, because it’s a way for the state to dig its way out of a $1.3 billion deficit by closing a loophole, instead of raising taxes.

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