States seek to collect taxes on Internet sales

ALBANY, N.Y. – Remember all those gifts you bought online during the holidays? Now it’s time to pay sales tax on them, at least so say the income tax forms of 20 states, including Maine.

The latest to outstretch that revenue-seeking hand are New York and California, which this year added a line requiring taxpayers to declare any tax they owe on out-of-state purchases.

Though state revenue agencies similarly sought sales tax on mail-order items before the e-commerce boom of the late 90s, Internet sales have “really shined a spotlight on it and increased the urgency,” said Harley Duncan, executive director of the Federation of Tax Administrators.

By law, residents are required to pay sales taxes to their states if they order books, clothing, computers and other items by mail or online from businesses based elsewhere.

The National Governors Association estimates state and local governments will lose at least $35 billion this year from Internet sales.

The new tax return line, New York state officials say, forces taxpayers to confront their liability or potentially face audits that could uncover credit card statements and mounting tax debt.

But it’s unclear whether that threat is enough.

Dan DeVeronica, 21, who owns an Internet cafe in Rochester, says most New Yorkers, including himself, will likely leave “line 56” blank “as sort of a protest.”

In Maine, a use tax on Internet and other out-of-state purchases has been charged for a number of years. These purchases are taxed only if a state tax has not been previously paid in another state.

Individual filers who don’t keep accurate records of their purchases can use a table of estimated purchases and the resultant tax that are included as part of instructional booklet accompanying the Maine state income tax forms. Maine businesses are expected to keep accurate records of their out-of-state purchases and report them.