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Wisconsin may join sales tax effortBy Jenny Price
Several key opponents of adopting uniform standards for collecting sales tax lost their seats in the Legislature in November's election, which saw Democrats win back control of the Senate and narrow the GOP's majority in the Assembly. And Gov. Jim Doyle has made adopting the standards one of his budget priorities again this year after lawmakers dumped the concept from his last two budgets. With the state facing a $1.6 billion budget deficit, and the governor having ruled out raising most other taxes or cutting major programs, it appears the momentum is in place for Wisconsin to join the national effort to push retailers to voluntarily collect the sales taxes and eventually make it the law for them to do so. Retailers located in Wisconsin must charge and collect sales tax from in-state customers, but federal law doesn't give the state the authority to require Web and catalog retailers to collect sales taxes if they don't have a store or some other physical presence here. Wisconsin and other states legally require online and catalog shoppers to pay the sales tax, but few cooperate or are aware of the law. But 21 other states, including neighboring Iowa and Minnesota, have adopted the voluntary standards laid out in a national agreement formed by participating state governments. More than 1,000 retailers have consented to collect sales taxes from buyers in those states. The national effort's goal is to get Congress to require all online and catalog retailers to collect sales taxes. Diane Hardt, administrator of the Revenue Department's Income, Sales and Excise Tax Division, has estimated the state could generate an additional $150 million a year if that happened. For state government, it's an opportunity to capture an ever-expanding source of revenue that had been off limits. For consumers, it means the cost of books they order from Amazon.com would include Wisconsin sales tax. And in some cases, whether or not shoppers pay sales tax on some food and other items would also change. Wisconsin would follow a set of uniform definitions to determine what is taxable: • Most food sales would be treated the same, but some foods now exempt (chocolate chips, for example) would be taxed and some that are now taxed (like licorice) would become exempt. • More types of medical equipment would be tax-exempt, including hospital beds, patient lifts, and I.V. stands that are purchased for in-home use. • Exemptions for equipment used to treat diabetes and equipment used to administer oxygen would be limited to equipment purchased for in-home use. • Internet and catalog retailers would have to collect sales tax from customers who place orders from other states. If the measure made it into the two-year state budget that begins July 1, Wisconsin would take in another $4.8 million in sales taxes by mid-2009, according to Revenue Department officials. The idea has backing from groups representing Wisconsin retailers, as well as major companies. Wisconsin Merchants Federation President Chris Tackett said keeping the status quo and not taxing Internet and catalog sales is a "direct assault on Main Street Wisconsin" retailers that don't have Web sites. The change would level the playing field for those stores who sell jewelry, books and other items that shoppers buy on the Internet. "It's sort of unfortunate and unfair to them because these are the people that get hit locally to fund Little League teams," said Tackett, whose group has 6,000 members. Karl Dahlen, VP and Senior Legal Officer at Lands' End said Lands' End supports the streamlined sales tax initiative. Dahlen said it greatly simplifies the state sales tax rules and creates a level playing field by requiring retailers, regardless of their physical presence within a state and channel through which they conduct business, to collect the same tax obligations currently imposed on consumers by state and local governments. But Linda Remeschatis, president of Wisconsinmade.com, said having to collect sales tax on the products it ships out of state wouldn't impact sales but having to re-program its system would likely put some financial burden on the company. The company, which has been in business for 7 years, ships everything from Wisconsin crafts to brats to Babcock ice cream to customers in all 50 states and around the world. "It's hard for me to imagine right now," Remeschatis said, adding she hopes the proposed system would be "so streamlined and simple" it doesn't cost her too much. "It's one thing to collect the tax but then you have to submit it back to the state," she said. "That becomes an economic hardship as well." The idea has opponents, including the online auction site eBay, which has lobbied on the issue in Madison. The company argues the streamlined sales tax "could cripple many of the small businesses who rely on eBay and other internet sites for survival," according to information posted for members on its government relations Web site, which reveals there are more than 1.5 million registered eBay users in Wisconsin. "Small businesses would be forced to collect, remit and account for sales tax to buyers in thousands of separate taxing jurisdictions, a prospect which is unrealistic to all but the largest companies." For more information: Streamlined Sales Tax Project www.streamlinedsalestax.org Jenny Price is a Madison freelance writer. jenny.price@gmail.com madison.com ©2009 Capital Newspapers. All rights reserved. |
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