Hoosier retailers want to make sure the next “Cyber Monday” is not “Tax-Free Monday” for those who shop online.
The Indiana Retail Council and Indiana Merchants for Tax Fairness chose online retailers’ big holiday shopping day to renew their push for what they consider tax fairness.
The coalition of 300 businesses wants the legislature to force online competitors with a physical presence in the state to collect Indiana sales taxes just as traditional businesses do.
Grant Monahan, retail council president and spokesman for the merchants group, said currently online retailers who don’t collect the sales tax have “a 7 percent advantage over brick-and-mortar stores” in the state.
That’s because tax laws haven’t caught up to Internet reality. Currently, all sales that take place in Indiana are subject to the state sales tax, including online and catalog sales. But while retailers with a physical presence in the state collect the 7 percent sales tax and send it to the state, online retailers not based here do not.
Although online customers are supposed to voluntarily send in the tax, few do.
The result, Monahan and others said Monday, is that traditional businesses are losing sales and the state is losing money.
A deal reached earlier this year with the nation’s biggest online retailer, Amazon, requires the company — which has a physical presence in the state due to its distribution centers — to start collecting and remitting Indiana’s 7 percent sales tax in 2014.
The business groups argued Monday that there is no reason to wait that long, noting that other states have earlier effective dates to collect the tax.
Two lawmakers, Rep. Ed DeLaney, D-Indianapolis, and Rep. Tom Dermody, R-LaPorte, plan to seek legislation in the session that begins in January to force online retailers to collect the tax.
In the past, though, similar legislation has failed.
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Monahan noted that a study last year by the Indiana Fiscal Policy Institute found that Indiana loses from $75 million to $125 million annually in lost sales tax revenue due to online sales.
In addition to asking the state to move quicker in collecting sales taxes from online retailers that have some physical presence in the state, the group wants Congress to take action that would affect all online retailers and help the bottom line of states who have struggled in recent years to balance their budgets.
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