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Indiana senator pushes taxing online sales

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A state senator plans to ask his Statehouse colleagues Thursday to help him lobby Congress for the right to tax online sales.

Sen. Luke Kenley, R-Noblesville, said this week he will pitch state lawmakers on the need to apply the state sales tax to online retailers. He estimates taxing online sales could net the state up to $400 million annually, but said it is as much about putting online retailers on the same playing field as traditional merchants.

"Our bricks and mortar retailers are being put at a huge disadvantage in this system," Kenley said. The state levies a 7-percent sales tax on most goods, giving online retailers a sizable advantage.

But the change will have to go through Congress. That is why Kenley said he will ask members of the Legislature's Commission on State Tax and Financing Policy to help him lobby Indiana's congressional delegation for the change.

Indiana Retail Council President Grant Monahan says state lawmakers could make an immediate gain by rewriting state law to apply the tax to Seattle-based online giant Amazon.com. Monahan said Tuesday the state can do this without waiting on the federal government because Amazon operates distribution centers in the state.

"We support that tax for all online retailers across the country, but apart from all that I believe that Indiana can do something now," he said.

Companies he represents with bricks and mortar operations collect sales taxes on online purchases, too, and send them to the states where the buyer had the merchandise shipped, Monahan said. Their "physical presence" in a state mandates they charge and collect the tax.

An Amazon spokeswoman said Wednesday she would rather see the issue addressed by Congress than state by state.

"We believe the sales tax issue needs to be solved at the federal level and we're actively working with the states, retailers and Congress to get federal legislation passed as soon as possible," Amazon spokeswoman Mary Osako wrote in an email response to questions.

Amazon operates three distribution warehouses in Indiana and announced in July it plans to open a fourth in the state.

A 1992 Supreme Court ruling effectively barred states from collecting taxes from most online operations. Kenley is president of the national group lobbying Congress for a new law. He is hoping the measure makes it into the package being crafted by the deficit reduction committee, thus giving it a better chance of approval by the frequently gridlocked Congress.

The Senate's second-ranking Democrat, Illinois Sen. Dick Durbin, is sponsoring the Senate measure. But some Republicans, including many of the freshmen members who have signed anti-tax activist Grover Norquist's pledge, are skittish about signing on with anything that may be seen as a tax hike, Kenley said.

"The solution is in the hands of the U.S. Congress," Kenley said. "We could pass legislation until the cows come home and it is not going to solve the problem."

A state law used to require companies that didn’t maintain a place of business in Indiana but had affiliated locations, such as distribution centers, to obtain a retail merchant’s certificate in order to sell goods to Indiana residents. That subjects the retailer to the same duties as an in-state merchant, including tax collections on products used in Indiana.

But that law was repealed in 2007 as a way to lure Amazon to locate warehouses here, according to lawmakers and economic development officials.

 

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  • Who's been law abiding since prohibition?
    Wake up person. Only a minority of persons in the US have been "law abiding" since the US made perhaps the most monumental blunder in history and attempted to outlaw alcohol with "Prohibition" in the 1920s. Naturally no one complied w/ a law which is against human nature, and so the majority of Americans got used to being law breakers; then the Federales gave up and repealed the offending amendment, and the organized crime syndicates that had made billions importing liquor began importing drugs. so now we have a liquor problem and a drug problem, and I don't see nobody too worried about following the "law," down here at street level.
  • Try something else
    I know that kenley gets pressure from Simons mall and others, that say the playing field needs to be leveled.
    It is understood, brick and mortar stores are expensive to operate. From the liability of the customers coming in - to the storm water utility that i pay to the city to maintain the storm drains. Havent you figured that into your infrastructure budget before?
    No instead of finding ways to limit the liability and expenses of the local retailers we force someone who is building the better mouse trap in Nevada to collect sales tax for our state. Kenley re-think the idea of taxing and cut corp tax for some of these retailers or set a cap on tort claims for some drunk who fell down in my store and i had to pay him.
  • Yes it is a sound argument
    That we do not want to pay more taxes is a very sound argument. Very few people have any real disposable income anymore. Let's be good law abiding citizens and allow more revenue for the Indiana State government. None of us can levy taxes, we have to keep trying to cut our own budgets. Quite possibly we can further destroy the economy and stifle business and the average tax payer who would like to buy something every now and then. Consumption is at it's lowest and taxes are out of control- I not some hard liner, right wing lunatic. I am just tired of working so hard and "giving it away" to, not sure what anymore in the way of "government services."
  • On-line sales tax
    If you are law-abiding citizens, you should be paying any tax not paid on out-of-state purchases along with your Indiana state tax return annually. So the fact that you don't want to pay more is not a sound, legal argument. The real issue is does IN what to do anything before the FEDS do and risk Amazon packing up and leaving.
    • WHy it is hard to vote Republican
      THis is the same jerk who tried to eliminate financial aid for diabled veterans with his SB577. What do you need the money for Kenley, more govt interference?

      I still shop locally for the convenience, i shop online for the hard to find things.

      Kenley how about taking the Dave Ramsey approach and pay things off.
    • tax tax tax
      http://articles.sfgate.com/2011-06-30/business/29720292_1_amazon-associates-sales-tax

      Why wouldn't this happen here? Levy that tax, kiss that 4th distribution center (along with the other 3) good bye. And lengthen the unemployment lines a bit more.
    • Oh Please
      Of course Amazon would love to see this taken up by Congress where it would be quickly shot down. "NO NEW TAXES" I think I saw that on the news. Tne internet retailers wield much more power in Washington that they do in the statehouse around the country and this is a not so clever ploy. Let keep the internet free for a little while longer.
    • Sales Tax
      Here we go again!! Another congressman wanting us to pay more sales tax.. Yet, we are still paying sales tax for MSA and the Dome.. We were supposed to lose those two taxes raises back in the 80's and we're still paying those, not to mention the new Stadium tax. Why don't you go tax the wealthy instead of messing with your average Joe.You could also check into having Lawmakers pay for their own insurance and tax them accordingly if you really want to help generate more money for the State...
    • Enough
      While we sit at our computer shopping and avoiding gas taxes and crowds, we pay local and state taxes for internet access, electricity/gas, real estate... what else can be sucked out of the tax payer for wasteful government spending.
    • Hate to see this happen
      I shop mostly by catalogs on the NET.

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