North Carolina and other states hoping to gain increased tax revenues from taxing e-commerce transactions will not benefit nearly as much as thought, according to a new study.
The Direct Market Association said e-commerce sales tax collections would be $3.2 billion in 2006, less than 10 percent of the $45 billion as reported by another study. That study, conducted by two University of Tennessee professors, was completed in 2001.
The study, titled “The Truth About Online Sales Taxes” also pointed out that states over reported by a wide margin the amount of sales taxes not collected. “In 2001, the states reported that approximately $13 billion went uncollected due to their inability to force out-of-state retailers to act as their unpaid tax collectors,” the study said. “In fact, the total amount potentially uncollected was about $1.9 billion.”
The results of that study combined with a slowing economy have triggered moves by an association of states calling for e-commerce taxation. Congress and the Supreme Court have taken stands against such taxes, especially if a company, such as Amazon, does not have a physical presence in states were sales originate from consumers.
Some companies recently began collecting the taxes voluntarily.
North Carolina is part of that state coalition.
For a report about the study, see: www.the-dma.org/cgi/dispnewsstand?article=1012