Posted on 03/23/2005 8:30:25 AM PST by SheLion
AUGUSTA - If Maine had been collecting the sales tax it was owed on Internet and mail-order sales, it is projected the state would have collected another $58.9 million in sales taxes in 2003. A national study also estimates that loss in tax revenue could grow to between $81 million and $126 million in 2008 if not corrected.
"This is tax that is owed under current law and we are not collecting it now," Rep. Arthur Lerman, D-Augusta, said last week. "I cannot understand why this issue is not drawing more attention from the administration or, frankly, from other legislators."
Lerman has introduced legislation that would have Maine join 18 states that have adopted model streamlined sales tax legislation.
Maine is among a group of 41 states and the District of Columbia that participated in drafting the legislation, but the state has not officially adopted the measure, which also requires congressional approval.
A coalition of state and local government officials from around the country joined by many large and small retailers is pushing Congress to enact the Simplified Sales and Use Tax Act, which would allow states to compel "remote sellers" to collect sales taxes as long as the states agree to eliminate a lot of the multiple exemptions, conflicting definitions and multiple rates that now make compliance difficult for businesses.
"Maybe it is time to move forward on this," Maine's Finance Commissioner Becky Wyke said Friday. "There are enough states in the past year that have actually adopted legislation so it will become effective if Congress acts."
Wyke said the issue of states seeking to collect taxes from out-of-state sellers is a significant one that has been debated since long before the dramatic increase in Web-based sales.
Even when Maine consumers now buy goods from a retailer in another state - either while visiting that state or through the Internet - they should pay Maine Revenue Services the general 5 percent sales tax because Maine's sales tax is really a sales and use tax.
That means an individual owes the 5 percent sales tax on the book or DVD he bought online from an out-of-state company because he is using the product in this state.
"The estimates we have from the [federal] Office of Management and Budget are between $30 million and $100 million," Wyke said, referring to the potential sales taxes Maine could be collecting each year. "That is certainly revenue we could use with all the demands we have on the state budget."
Even higher amounts are estimated in a University of Tennessee study that extrapolated lost tax revenues based on actual sales of some major Web and mail-order companies to individuals in various states.
The problem is how to collect the tax that is owed. Maine currently has a line on its personal income tax form aimed at collecting some of the taxes due on personal purchases made on the Internet or made while visiting a tax-free state such as New Hampshire.
But it is voluntary - the state relies on individuals being honest about reporting such purchases, but has no means of verifying if they don't. Tax officials privately admit that the goal of many Americans is to avoid paying any taxes they are not forced to pay.
"We have been monitoring the [sales tax coalition] progress and the process for years now," Sen. Joe Perry, D-Bangor, co-chairman of the Legislature's Taxation Committee said last week. "I think it is time to get moving on this and I am glad the bill has been introduced."
But, implementing the model legislation is easier said than done.
The legislation likely has major implications for big online and catalog retailers, like Freeport-based L.L. Bean.
The company has "no problem" with the concept, but does have concerns about its implementation, according to L.L. Bean Vice President for Public Affairs John Oliver.
"In our industry this proposal is known as simplification light," he said Friday. "They could be doing a lot more to simplify the definitions and the rates and the options."
Oliver said the state coalition officials that have been negotiating the "simplified" model law have made progress, but not to where retailers like L.L. Bean would like to see the law.
He said individual states have developed their own patchwork of exemptions over the years and many seem reluctant to give them up for the ease of a simplified tax structure.
Including states, counties, communities and special districts, there are more than 7,000 jurisdictions in the country that impose sales taxes.
In some states, consumers pay a state sales tax, a county sales tax and a sales tax on certain items to help fund schools or other special sales tax district goal.
The model law would standardize definitions and do away with specific exemptions groups have carved out over the years. An example could be Maine's sales tax exemption on Girl Scout cookies.
Modest variations in rates would be allowed. For example, Maine's general sales tax is 5 percent, but it rises to 7 percent for prepared foods bought at a restaurant or fast food outlet. The two different rates would be allowed under the model as currently proposed.
Some retailers, particularly sellers of small, high-priced items, in many states where sales taxes are now collected also support the legislation.
They say they are losing sales because residents are going online or traveling out of state to buy the goods to avoid paying the tax.
Wyke said there will be many taxing decisions to be made if Maine joins in adopting the model legislation.
"There are things we tax now that we won't be able to and things we don't tax now that we will tax," she said. "But, we want it to be revenue neutral and not be an overall tax increase."
The process of overhauling the sales tax concerns many Republicans, like Sen. Richard Nass, R-Acton. He opposed joining the model sales tax movement two years ago because adopting the approach would mean taxing items not currently taxed in Maine.
"I am not interested in looking at any proposal that taxes something new when we have not gotten our spending under control," he said last week.
Nass is concerned that there will be "tax increases" hidden in the sales tax simplification process.
Individual states have tried on their own to force out-of-state sellers to collect sales taxes for them, but without much success.
The issue has been to the U.S. Supreme Court twice, and the law controlling the issue was clarified in a 1992 case, Quill Corp. v. North Dakota.
That ruling said that unless the seller has stores or some other substantial presence in a state - what lawyers call a "nexus" - that state cannot require the out-of-state seller to collect the tax.
Good grief. Maine treats a paycheck like an allowance to be used at the libs discretion.
Maine has become the latest blue cesspool state, ever increasingly inhabited by Starbucks Liberals who want to "live in the country as long as they also have all the welfare and transfer payment they had in New York and Massachusetts, plus all the EnviroPsycho Laws to impose on the rest of the state." And of course, the key is "revenue enhancement."
Excellent cartoon that says it all -- we are already being taxed to death by all forms of taxation, and the public still just takes it. I should publish a book of all the letters and emails I have sent to Washington and Sacramento about runaway, confiscatory taxation --- and now the libs (as usual) want to tax even more -- just think what it would be like, if Skerry had gotten into the White House. Where are my Rolaids???
Oh yes! And they are digging deep, believe me!
Oh Gawd! Parish the thought!!!
Sure, we need to be taxed for the necessary and legitimate tasks of government.
But we need to agree on how to get rid of the other 90% that they keep collecting.
Maine is a very blue state. I think that says it all. 
So does that conversely mean a Maine resident who buys a book at the Mall of Maine while driving down to vacation on Cape Cod, and intends to read and throw away the book on Cape Cod, is exempt from paying sales tax because he intends to use the product on Cape Cod?
Oh yes. When they are too gutless to cut spending, stick it to the taxpayers and claim it's for our own good!
Cape Cod will probably want the taxes because the book was brought into THEIR state. Makes a lot of sense, doesn't it? ~snicker!
Well DUH! Why do they think mail order and internet based sales exist?
(Denny Crane: "Sometimes you can only look for answers from God and failing that... and Fox News".)
If a particular state decided not to charge sales tax on goods sold via Net, wouldn't that help business in that state?
I know that most company's on the Net charge tax. But they usually don't collect the tax where the consumer is ordering out off. So, since the buyer didn't buy the product in his own state, the state isn't getting the taxes.
But it's the American Way to Shop Cheap, and we all know that we can find items cheaper on the Internet then what we can find around our own home towns.
Also, what about shut-ins that HAVE to order off of the Net since they cannot get out and about?
Insanity rules in Augusta. Where's these taxes,fees,registrations etc gonna end?? Unbelievable!!
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