Legislation Pending for Virginia Online Sales Tax

There is…already…a 5% state sales tax on online purchases, but apparently, nobody is paying it…even the state senator who favors the crackdown.

Hanger :  Technically, you know, if we go online, which I have done myself, and purchase things through Amazon or any of the online retailers…

State Senator Emmett Hanger.

Hanger:  Technically, we are supposed to file a particular form when we file our income taxes each year in May and have retained all of those receipts in a shoebox and tally that up and transmit it to our Department of Taxation, but as a practical matter that just doesn’t happen.

Senator Hanger says it is more practical to go after the major online retailers and make them collect the tax.
Hanger:  I would hope, really, that rather than avoiding the responsibility they would actually be willing to comply without us really putting it to them and forcing them to them.

Fishburne:  So, who are these people, can you name them?

Hanger:  Well, not to be critical of them at all, but clearly there are a couple of them that have strategies of avoiding the tax, with the largest one being, of course, Amazon, so that they can maintain what they view as a competitive advantage, which is exactly what I’m trying to get at, it’s totally unfair for us to allow them not to collect the sales tax and gain a competitive advantage over the bricks and mortar stores or even other online retailers who recognize a responsibility to collect it and they’re already doing that.

Hanger’s bill has passed the Senate, but has opposition in the house, and perhaps with the Governor.

Urban:  There is sort of a anti-tax tradition in Virginia, at least in some significant sectors, to try and keep the government’s hands off of these types of transactions.

Dr. David Urban is interim Dean of the School of Business at VCU.

Urban:  But, it, whether they are taxed or not, ah, I don’t expect there to be any significant abatement in the growth in online sales.

That’s not what the Northern Virginia Technology Council believes…saying online retailers would sever their ties with their Virginia affiliates if the law were to pass.  Governor McDonnell’s new Secretary of Technology is a former vice chairman of that council, and the Governor has fought new taxes…or perhaps anything that feels like new taxes.

Hanger:  When we talked personally he was not, he was really non-committal on it, but I think he understands and I certainly want to remind him, that we’re not talking about a penny of new tax, we’re talking about tax that is currently owed because of our sales and use statutes but that is not paid because of the impracticality of collecting it.

But whether Hanger’s bill passes or not this session, David Urban says the temptation for politicians to tap into online sales will increase as time goes by.

Urban:  You know, I think you’re absolutely right about that, I think that, um, there is just too much potential revenue sitting out there, there is always going to be some interest in trying to capture some of that for the public use.

Meantime, online sales continue to increase, even in hard times, and become a larger part of what we spend, and what Virginia loses in sales tax revenue.  

Urban:  The thing about online sales is that every year when a prediction is made every year about how online sales are going to grow, the prediction is usually exceeded by at least threefold.Charles Fishburne, WCVE News.