ACROSS MISSISSIPPI — Mississippi lost at least $616.5 million in online sales tax collections during the five-year period from 2007 until 2012, a survey says.
Mississippi and other states could soon have the option to collect sales taxes on Internet purchases if the U.S. Senate approves, as expected, the Marketplace Fairness Act, legislation that would give states the authority to collect the e-commerce sales taxes.
Under the Marketplace Fairness Act, states would have to rewrite their tax laws in certain areas to participate. In particular, states would have to write laws to require that the sales tax be collected at the point of delivery rather than at the point of sale.
Starkville resident Denise Cosper said her family shops a lot online and said it wouldn’t change their shopping habits if a sales tax is imposed on purchases.
“We shop a lot on Amazon.com, and they have already started to charge a sales tax,” Cosper said. “Apparently we are supposed to be paying a sales tax.”
Cosper said it won’t impact her family that much, but it may impact others who have a small business that buys items online.
Before leaving office, Republican Gov. Haley Barbour, who had opposed any kind of new taxes, changed his stance and said he supported allowing states to collect sales taxes on online purchases. His soon-to-be-successor, then Republican Lt. Gov. Phil Bryant, however, was opposed to it, saying at the time through his spokesman that he was “not in favor of raising anyone’s taxes in these tough economic times.”
Now-Gov. Bryant sent a letter to U.S. Sen. Thad Cochran, R-Miss., last month saying he had no objection to the Marketplace Fairness Act.
Crowell Armstrong, president of the Mississippi Retail and Grocers Association, said online sales taxes should be collected.
“The way it is now is unfair to the mom and pop businesses in Mississippi who have to charge sales taxes,” Armstrong said.
Even if the measure passes in Congress, it may not be a simple process to implement in Mississippi.
Department of Revenue spokeswoman Kathy Waterbury said it depends on the legislation that Congress passes to see if the state will have to amend its tax codes.
“Based on what I have seen thus far, Mississippi will need to make quite a few changes to our sales tax code to be in compliance with current streamlined sales tax provisions,” Waterbury said. “The biggest is that we can only have one rate of tax — as an example, industry, certain farming operations and forestry operations currently have reduced rates of sales tax. Additionally, there are standard definitions that would need to be adopted and questions about city diversions that we will need to look at.”
Waterbury said there are costs associated with implementing a streamlined sales tax, including the state paying for the required computer software for the remote sellers, and paying the retailers the actual costs associated with collecting the tax. She said that amount has not been determined, but it will be significantly more than the $13 million annually the state pays the retailers currently. Under current law, the state pays retailers no more than $50 a month per account, according to Waterbury.
“When authorized by Congress, the Legislature will want to look at the costs and what the required changes to our tax code will be, along with the revenue benefits gained from remote sellers collecting the tax,” Waterbury said.