Online Sales Taxes -- Missouri and Illinois Stores and Governments Expect to Benefit

Michael Calhoun
June 22, 2018 - 3:06 am
Woman walking with shopping bags on shopping mall background.

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ST. LOUIS (KMOX)  -- The next time you fill up the virtual shopping cart at your favorite website, you'll likely see a new line item -- sales tax.  A U.S. Supreme Court ruling opens the door to full taxation of your online purchases.

We're looking at the impact on the bi-state.

MISSOURI

Jeremy LaFaver of the Missouri Budget Project says an analysis done in 2012 estimated Missouri missed out on between $200 and 275 million a year because of the lack of online sales taxes.

"These are taxes that are owed not just to the state already but are also owed to their local governments and schools and initiatves passed in their local areas," he says.

Don't expect to see a new line for tax immediately on your favorite website.

The Missouri legislature will have to act to create a mechanism to collect these taxes when you shop on Overstock or Wayfair.

As for what could be done with all of that new revenue, LaFaver says the state could restore cuts to higher education and senior home services. Gov. Parson has stressed infrastructure as a top priority. Tax cuts are also slated to take effect which will balance out much of the gain from online sales, LaFaver says.

Amazon recently announced it would start charging sales tax for purchases in Missouri. Generally, sales tax has always been required if a company has an on-the-ground presence in the state.

DID YOU PAY?

Did you know in missouri, in theory, you were supposed to self-report your taxes from online purchases?

Did anybody actually do that?

"Well, you're actually talking to one of them," LaFaver said during the phone interview.

A decade ago he says he was buying an engagement ring in Kansas, which he had sent to Missouri. He decided he'd pay taxes on it and be a good citizen.

"I went through the process of submitting my use tax forms and it's actually quite extensive and cumbersome, and I can see why the vast majority of taxpayers don't know about it and don't do it," LaFaver says.

ILLINOIS

"We're very pleased with the decision. It's been a long fight for more than a decade," says Rob Karr, president of the Illinois Retail Merchants Association.

The store on the corner and the app on your phone often sell the same products, so he's argued why should the government add more to the price of one but not the other?

"We've already contended that a sale is a sale no matter where it occurs, and while there may be different competitive advantages based on the business model you're using, the tax code should not discriminate against actors who are doing the same thing in the marketplace."

Most affected were retailers selling soft goods, sporting goods, and electronics.

Karr says this was really the only beef brick and mortar retailers had with internet sellers; so let the competition begin.

"There's been a lot of terms floating around, like retail apocalypse. I think that's an overstatement. It ignores the fact that retail is the most dynamic of the business sectors. It's in a constant state of evolution."

How much could internet sales taxes mean to Illinois? A cool $200 million, according to estimates.