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Collecting ECommerce Taxes An Interactive Map

Collecting E-Commerce Taxes | E-Fairness Legislation

2/26/2014

Main Street’s all across America are looking to Washington to close a loophole that gives online-only retailers an unfair advantage over their Main Street competitors.  This unfair advantage costs local communities jobs and tax revenue and creates significant unfairness in the marketplace for businesses and consumers alike.

NCSL advocates for passage of e-fairness legislation because it levels the playing field for local businesses, which are the economic backbones of our communities that provide employment and tax revenue to fund vital services. As sales taxes account for over a third of revenues for most states, including over half of tax collections for six states, the inability to collect taxes that are legally owed constrains states’ options to reform their tax code elsewhere. This includes lowering tax rates or requiring states to raise certain tax rates to fund necessary government services.

How Did We Get Here?

Two Supreme Court rulings (Bellas Hess and Quill) cite concern that collecting sales tax for multiple states would be too difficult. As it is now, the Supreme Court ruled that states can only require retailers to collect state taxes in territories where they have offices or stores.

How is it Impacting States?

States lost an estimated $23.3 billion in 2012 from being prohibited from collecting sales tax from online and catalog purchases. With nearly every state still facing budget shortfalls, this revenue could help fund police, school teachers and other much-needed programs.

According to NCSL’s survey of state legislative fiscal officers, between FY 2008-2013, states closed a cumulative $527.7 billion budget gap, primarily through program reductions. Raising taxes in the sluggish economy remains an unviable option for most states, so closing the loophole on sales tax collection could provide states with the option of using some of the additional revenue to offset federal spending reductions.

States are Taking Action

In the absence of federal action, states have sought solutions to the remote sales tax loophole in order to protect their budgets as well as their main street retailers. Over half the states have enacted legislation to respond to the concerns raised in the Supreme Court decisions to remove the burden and cost on out of state sellers to collect and remit sales taxes, a number of states have enacted affiliate nexus or “Amazon” laws, some have increased reporting requirements on retailers, and others have tried other mechanisms to collect the taxes they are already owed. Unfortunately, state attempts alone will not solve the problem; it must be solved by Congress.

What’s Next

The U.S. Senate voted May 6, 2013 to approve the Marketplace Fairness Act (MFA), S. 743, by a vote of 69-27. The NCSL-supported legislation is now before the House of Representatives' Judiciary Committee for consideration. The MFA authorizes states that adhere to certain simplifications to require out-of-state retailers that have more than $1 million a year in out-of-state sales to collect and remit that state's sales taxes. The legislation also requires states to provide software to online retailers free of charge and removes any liability from the retailer should the software malfunction.

All state-by-state figures displayed on the map are in millions of dollars. To see specific state information, move your mouse over that particular state.

 

Sources: State budget gap data from NCSL's "State Budget Update: June 2008," "State Budget Update: November 2008," February 2009 "Update on State Budget Gaps: FY 2009 & FY 2010," "State Budget Update: November 2009" and the NCSL Fiscal Affairs program staff. Sales tax data from "State and Local Sales Tax Revenue Losses from E-Commerce Estimates as of April 2009" by Dr. Donald Bruce and Dr. William Fox, Center for Business and Economic Research, University of Tennessee.

*Alaska has no statewide sales tax, but some local jurisdictions collect sales tax.

Estimated Uncollected Use Tax From All Remote Sales in 2012

   Non-Electronic Business to Customer Non-electronic Business to Business Electronic Business to Business and Business to Customer Total
 Alabama     101,657,313 75,677,086 170,400,000       347,734,399
 Alaska           880,149 655,832 1,500,000          3,035,981
 Arizona     220,741,594 118,086,660 369,800,000       708,628,254
 Arkansas       67,947,572 54,464,358 113,900,000       236,311,930
 California  1,136,801,607 1,118,366,340 1,904,500,000    4,159,667,947
 Colorado     103,065,552 76,798,022 172,700,000       352,563,574
 Connecticut       38,022,475 50,544,930 63,800,000       152,367,405
 District of Columbia       21,211,612 15,805,570 35,500,000         72,517,182
 Florida     479,769,709 200,120,301 803,800,000    1,483,690,010
 Georgia     244,857,701 182,452,688 410,300,000       837,610,389
 Hawaii       35,822,100 26,692,395 60,000,000       122,514,495
 Idaho       27,636,706 29,083,776 46,400,000       103,120,482
 Illinios     302,507,519 249,542,069 506,800,000    1,058,849,588
 Indiana     116,619,861 86,897,847 195,300,000       398,817,708
 Iowa       52,897,008 39,415,552 88,700,000       181,012,560
 Kansas       85,286,525 51,037,503 142,900,000       279,224,028
 Kentucky       65,659,182 48,925,127 109,900,000       224,484,309
 Louisiana     236,320,247 176,091,110 395,900,000       808,311,357
 Maine       19,099,252 14,231,572 32,100,000         65,430,824
 Maryland     109,930,722 81,913,518 184,100,000       375,944,240
 Massachusetts       78,333,340 58,369,120 131,300,000       268,002,460
 Michigan       84,494,390 62,959,949 141,500,000       288,954,339
 Minnesota     140,471,923 79,447,327 235,300,000       455,219,250
 Mississippi       80,533,715 87,852,645 134,900,000       303,286,360
 Missouri     125,773,420 93,718,508 210,700,000       430,191,928
 Nebraska       36,614,235 20,137,833 61,300,000       118,052,068
 Nevada     100,865,178 75,158,440 168,900,000       344,923,618
 New Jersey     120,844,580 90,045,845 202,500,000       413,390,425
 New Mexico       71,908,246 53,581,540 120,500,000       245,989,786
 New York     516,559,974 384,908,277 865,500,000    1,766,968,251
 North Carolina     127,621,735 95,095,757 213,800,000       436,517,492
 North Dakota         9,153,558 6,820,661 15,300,000         31,274,219
 Ohio     183,775,298 136,937,891 307,900,000       628,613,189
 Oklahoma       84,054,315 71,494,343 140,800,000       296,348,658
 Pennsylvania     206,483,165 153,858,377 345,900,000       706,241,542
 Rhode Island       17,338,952 24,097,506 29,000,000         70,436,458
 South Carolina       74,372,666 55,417,872 124,500,000       254,290,538
 South Dakota       17,779,027 13,247,822 29,800,000         60,826,849
 Tennessee     245,209,761 92,471,128 410,800,000       748,480,889
 Texas     519,552,484 387,138,109 870,400,000    1,777,090,593
 Utah       52,808,993 39,349,968 88,500,000       180,658,961
 Vermont       14,962,548 4,696,781 25,100,000         44,759,329
 Virginia     123,573,045 92,078,926 207,000,000       422,651,971
 Washington     168,284,660 90,784,044 281,900,000       540,968,704
 West Virginia       30,189,141 22,495,065 50,600,000       103,284,206
 Wisconsin       84,846,450 62,059,664 142,100,000       289,006,114
 Wyoming       17,074,908 16,069,797 28,600,000         61,744,705
 Total   6,800,214,113  5,067,095,451  11,392,700,000  23,260,009,564

Estimates from University of Tennessee Study

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