Pa. Residents Will Be Charged Internet Tax

Tuesday, 01 Nov 2011 04:57 AM

By Sandy Fitzgerald

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Pennsylvania taxpayers will be expected to self-report taxes owed for their Internet or catalog purchases, a move that could bring in millions more in sales taxes if people are honest about their shopping habits, state officials said.
 
The state will lose out on $345 million this year, according to tax officials, because Internet and catalog businesses with no physical presence in Pennsylvania don’t collect sales tax, said the Pittsburgh Tribune-Review.
 
Taxpayers are already required to pay a use tax if their online or out-of-state purchases weren’t taxed at the point of sale. However, shoppers were asked to report their tax on a separate form, which individual taxpayers did not use often. The new income tax form contains a use-tax line where filers can enter a figure.
 
“It’s not something that a taxpayer can skip over,” said Elizabeth Brassell, spokeswoman for the state Department of Revenue. However, she admitted enforcing collections might be tough, because taxpayers will be trusted to report their web purchases.
 
Other states that have added a use-tax line to their tax forms, have logged in millions in voluntary collections, a trend Pennsylvania hopes to follow.
 
In New York, the state collected $7 million before the changeover to a new tax line, and $35 million just last year. Brassell said Pennsylvania could collect an additional $5 million to $6 million a year after the law takes hold.
 
As Internet sales are growing, there is a great deal of frustration being voiced from brick-and-mortar stores, which are losing money and customers to online sales.

A House bill introduced last week empowers states to collect sales tax from online retailers outside their borders, and the Senate is considering a similar bill.
 
Across the country, 24 states set standards in an attempt to make tax collections from remote sellers easier. However, even with the new use tax line, Pennsylvania still won’t know just how much its state’s residents are buying online.

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