Newspaper article The Record (Bergen County, NJ)

Internet Sales Tax to Become a Reality

Newspaper article The Record (Bergen County, NJ)

Internet Sales Tax to Become a Reality

Article excerpt

It was inevitable: The tax break Internet shoppers have enjoyed for years is coming to an end.

Congress returns from its spring break on Monday, and the long- debated, often-delayed attempt to bring fairness to online shopping is expected to be high on its agenda.

It's about time.

Why should I pay 7 percent sales tax if I buy a camera from a store in Westwood, but avoid the tax if I buy the same camera online from a store on Manhattan's West Side? And why would my daughter, who lives in New York, be assessed the tax if she bought the camera there -- online or in person -- but not if she made the purchase online from the New Jersey store?

Actually, those are trick questions. Lost in the Internet tax debate is that even without the Marketplace Fairness Act, you're supposed to pay the tax -- whether you buy online, by mail order or in person, in New Jersey or out of state. It's just that most people don't know the law, or ignore it.

The confusion is between "pay" and "collect."

The U.S. Supreme Court ruled in 1992 that an Internet or mail order company is required to collect sales taxes only in states in which it has a physical location, such as a store, warehouse or office.

But that doesn't mean purchases are tax free. You're still obligated to pay "a compensating use tax" when the seller does not collect a sales tax on taxable goods and services or it is collected at a rate less than you'd pay in New Jersey.

That's pretty clear cut, but consumers rarely pay, and states rarely attempt to collect, costing them as much as $23 billion in lost taxes.

New Jersey's share would be an estimated $200 million, treasury spokesman Bill Quinn said.

Some people actually do pay voluntarily, and the state makes periodic efforts to collect, especially for big-ticket items.

Back in 1995, when the Whitman administration was looking for extra tax dollars, New Jersey sent letters to doctors and dentists suggesting they do a self-audit and pay the tax on big-ticket items they may have purchased out of state, such as X-ray machines.

Individuals can pay any use tax due on Form ST-18 within 20 days after property is brought into the state or on Line 45 of their state income tax return. …

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