IF Tax Day were Jan. 1 instead of April 15, then perhaps more Oklahomans would realize that their Cyber Monday purchases are subject to sales tax. As it is, the four-month gap offers another reason to utter the old Steve Martin gag line of “I forgot!”
Two measures of the status quo are as constant as death and taxes. One is that Congress continues to punt on the question of sales tax collections for online purchases. The other is that Oklahoma cities are heavily dependent on sales taxes for day-to-day operations.
These two worlds collide because consumers avoid sales taxes by spending money with distant e-tailers instead of local retailers. We can't blame them. Fact is, though, that tax avoidance strategies aren't the same as tax-exempt status. Every dollar spent by Oklahoma consumers on nontax-exempt goods is subject to the sales tax, regardless of where the goods were bought.
Internet sales surged on Cyber Monday, which follows Black Friday every year. While the latter involves in-store purchases for which sales taxes are collected, Cyber Monday often means Oklahomans get the goods without sales taxes being added to the total. Whether an online purchase is taxed depends on whether the vendor has a physical presence in the state.
Nationally, Cyber Monday sales were up an estimated 25 percent by midafternoon on the big day. We don't know if that was true here, but it's certain that Oklahomans bought merchandise from remote retailers and weren't assessed a sales tax. They're supposed to pay it anyway at the time income tax returns are filed, by April 15 next year. But will they?
The Oklahoma Municipal League and its member cities and towns certainly hope so. Executive Director Carolyn Stager says she hopes Oklahoma shoppers save their receipts for later remittance of owed sales taxes. Good luck with that!
This is an honor system. People don't always do what's honorable under a taxing method that's “voluntary” and difficult to enforce. The Oklahoma Tax Commission, which strictly enforces the remittance of sales taxes by local businesses that collect it, can't easily enforce a system by which consumers essentially self-report what they owe. Those who don't save receipts for precise payment calculations are offered an option on personal income tax returns to estimate — and pay — what they owe.
Cyber Monday is but one day of the year and a fraction of the holiday buying season. We don't know how much e-commerce is taking place within Oklahoma, so we don't know precisely how much sales taxes go unpaid. Earlier this year, former Gov. Brad Henry put the figure at more than $200 million. He and other current and former governors have supported federal legislation designed to level the playing field between local and remote retailers. Anti-tax conservatives have been cool to the idea.
Meantime, the dependence of Oklahoma cities and towns on the sales tax will continue. If anything, sales tax will become a greater piece of the state's revenue pie if conservatives get their way and reduce the income tax. Sales taxes will continue to be added to grocery and health care products — unless they're bought from Amazon.com or other remote retailers that don't collect taxes on Oklahoma purchases.
Either through legislation or cooperative agreements, the e-tailer advantage will shrink or go away. “I forgot!” will disappear as an excuse. And Cyber Monday could become merely the tail end of Black Weekend.