Remote control: Texas, Amazon reach tax collection accord

by The Oklahoman Editorial Board Published: June 12, 2012
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A customer walks into a store, inspects the merchandise, asks a salesman for advice, decides what to buy and then walks out. He goes home and makes the purchase online from a vendor that doesn't add sales tax because it has no physical presence in the state.

The customer, a participant in a practice known as “showrooming,” keeps his receipt so that next year when filing his state income tax return he can remit a use tax to the state. But will he?

The honor system for paying sales taxes doesn't work quite that well. The pennies and dollars not rolling into state coffers, thanks to unreported online sales, tally up to $185 million to $225 million each year, according to the Oklahoma Tax Commission.

Hand-wringing over this revenue predicament has gone on for years. Lately, some states have done something about it. Amazon.com has reached tax collection agreements with seven states, with five more in the works. Texas is among that dozen. Oklahoma is not.

Beginning July 1, Amazon will collect state sales taxes on orders delivered to Texas. The deal, announced in April, includes Amazon bringing 2,500 jobs and $200 million in capital investments to the Lone Star State. Texas' concession was to drop its demand for $269 million for what the state says it was owed in taxes, penalties and interest from December 2005 to December 2009.

While local retailers assess 8.25 percent on purchases in Texas, Amazon will collect only the 6.25 percent state portion of the sales tax. But it's better than zero, which is the likely quantity of the prospects for change in the remote retailer sales tax collection procedure on the horizon in Oklahoma.


by The Oklahoman Editorial Board
The Oklahoman Editorial Board consists of Gary Pierson, President and CEO of The Oklahoma Publishing Company; Christopher P. Reen, president and publisher of The Oklahoman; Kelly Dyer Fry, editor and vice president of news; Christy Gaylord...
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