You could be forced to pay sales tax for Internet purchases, like it or not

Posted at 4:44 PM, Jan 29, 2016
and last updated 2016-01-29 23:51:51-05

SALT LAKE CITY -- A bill unveiled in the legislature on Friday could require online retailers to start charging sales tax on purchases going to Utah.

State lawmakers said existing law requires a sales tax to be paid on Internet purchases, but they acknowledged that in reality, no one is paying it. Estimates are Utah has lost more than $180 million in sales tax revenues because of it.

House Bill 235, sponsored by Rep. Mike McKell, R-Spanish Fork, and Sen. Curt Bramble, R-Provo, would seek to have online retailers' shopping carts calculate the sales tax.

"If a business wants to access the Utah market, if they want to sell their products in the state of Utah, then they should comply with the same laws that any other business in Utah complies with," Sen. Bramble said.

Rep. McKell said in an interview with FOX 13 on Friday that he is proposing to lower the overall sales-tax rate in Utah so it would not be a burden to taxpayers.

"If we're going to collect sales tax, Internet sales tax, we need to reduce our current sales tax," he said.

Bramble acknowledged this bill has had pushback from online retailers and the public. Most, he said, were people upset about paying any kind of tax for online purchases.

"I've gotten maybe 50 emails from people that say, 'The only place I can avoid taxes is if I buy something on the Internet. Therefore, I shouldn't have to pay it because I don't want to,'" he said.

Lawmakers have tried to characterize the legislation as one of fairness. Sen. Wayne Harper, R-Taylorsville, said existing court decisions and laws are out of date and the new legislation would be updated to reflect that. He insisted this puts online retailers on equal footing with brick-and-mortar stores.

"What we're talking about is treating all taxpayers and all transactions the same. Whether you buy a book at Sam Weller's or King's English or Amazon or eBay, it's the same book. It's the same transaction," he said.

Evelyn Everton with the group Americans for Prosperity Utah  said she opposed the bills, believing they could hurt retailers and consumers.

"It just is a very burdensome process, especially for smaller online retailers. A lot of them may be held out of the market because of this," she said.

Some lawmakers admitted to FOX 13 that, like the public, they didn't always pay for online purchases when they filed annual tax returns.

"Once this bill passes, I'll pay the taxes just like everybody else," Rep. McKell said. "Just like you'll pay and I'll pay."

Governor Gary Herbert said he calculated online sales into his tax return.

"I forgot to include it on my own return. I had to go back and file an amended return," Sen. Bramble said. "The total check I had to write the state of Utah is $40."