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Thursday, October 20, 2011

Shocking: Ohioans Not Paying Taxes for Online Purchases

Posted By on Thu, Oct 20, 2011 at 10:00 AM


When you dial up the internet and buy something — a refrigerator, a movie, a new phone, a tiger — you don't pay sales tax. A 1992 Supreme Court ruling says states can't regulate interstate commerce, so folks selling stuff online don't have to collect sales tax for states, which translates into cheaper purchases for consumers.

Ohio and other states want that money, however, and the Buckeye State's attempt to recoup that money comes via state income tax form — Ohioans are supposed to voluntarily declare their online purchases as a "use tax."

If you guessed no one in Ohio is actually doing that, you'd be absolutely correct. A study from researchers at the University of Cincinnati claims only 1% are doing the noble and honest thing and ponying up the extra cash, even though Ohio has no way of tracking these things, and the 99% — no, not that 99% — is costing Ohio $200 million a year. Via WTAM:

Researchers found that only 1 percent of the income tax returns filed included a use tax, but 60 percent of Ohioans surveyed say they make online purchases.

"If I'm going down the highway at 70 miles an hour I'm speeding, but there's no cops around to catch me. It's that kind of thing that we've got going on now," said Jeff Rexhausen, associate director of research at the University of Cincinnati Economics Center.

It's not just the state that's losing out. The study also found retailers in Ohio will lose about $600 million to online retailers. It also claims that the state could recapture 11,000 direct retail jobs and 15,000 indirect jobs.

That is, of course, if the internet just disappeared and people stopped shopping on the couch in their underwear. So, um, not likely.

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