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Bill might force businesses to tax online sales

A bill that could pressure companies to tack on sales taxes for online purchases bought from Michigan passed through committee Wednesday morning and is headed for the House floor.

The bill would force online businesses to collect Michigan taxes during the purchase, handing them over to the state afterward. Yet there’s no way of insuring that out-of-state businesses comply, even if it passes.

“I would hope businesses would pay it,” said Rep. Jim Townsend, D-Royal Oak.

If hope fails, Townsend said he thinks the bill could prompt other states to enact similar laws, perhaps prompting the federal government to address it. But he argued the bill isn’t symbolic.

“It moves the conversation forward,” Townsend said.

Michigan already requires taxes to be payed on Internet sales. The problem is, many don’t.

According to a House Fiscal analysis of the bill, an estimated $460 million in taxes on remote transactions were never paid in 2012-13. Another $482.4 million is expected to go unpaid in 2013-14.

Paying what’s called the “use tax” is essentially voluntary, said Katie Carey, press secretary for the House Democratic Caucus. Since there aren’t any repercussions for not paying, many leave it blank.

“There’s no check on you,” Carey said. “How do you know that I went and bought my shoes at Playmakers down the road, or Amazon?”

And Amazon.com is one of the Internet megastores the bill is aimed at.

“We’ve already given corporations in Michigan a $1.8 billion tax break in recent years,” said Rep. Bill LaVoy, D-Monroe. “We can’t continue to give unfair advantages to major corporations.”

According to the press release, the Michigan Department of Treasury collected $5.87 million from 108,600 taxpayers in 2013 but expects millions more will go uncollected next year.

Republican support for the measure is mixed, said Ari Adler, press secretary for the House Republicans.

Speaker of the House Jase Bolger thinks the issue should be addressed federally, Adler said, but indicated neither support nor opposition. Adler’s comments might give some indication, however.

“It’s important to note that this is not a new tax — people already owe this tax. They are supposed to calculate it and pay it as a ‘use tax’ at the end of each calendar year,” he said.

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