- Associated Press - Monday, April 4, 2016

OKLAHOMA CITY (AP) - A bill intended to capture some of the estimated $150 million annually in unpaid sales and use taxes on mostly Internet purchases made by Oklahomans cleared a House committee on Monday as legislators seek ways to shore up a $1.3 billion hole in next year’s budget.

The measure, approved 5-2 by a House Subcommittee on Revenue and Taxation, would require online retailers with more than $1 million in annual sales to notify Oklahoma residents who make purchases that they might owe state taxes.

State law requires residents to pay a use tax on property purchased out of state for “use” or storage in Oklahoma, but tax officials estimate only 4 percent of state taxpayers comply with the rule. It’s estimated Oklahoma misses out on about $150 million in unpaid use taxes each year, said Tony Mastin, executive director of the Oklahoma Tax Commission.

Sen. Stephanie Bice, who wrote the bill, says she believes more taxpayers would be likely to pay their use taxes if they received an annual notice from retailers indicating how much of their sales may be subject to the tax.

“We believe that many individuals do not realize that they should be remitting a use tax on online purchases,” Bice said.

Under current federal guidelines, only retailers with a physical presence, or nexus, in a state are required to collect and remit state sales taxes. While out-of-state retailers are not required to collect and remit sales taxes from online purchases, some do.

“We probably have 1,300 retailers that have voluntarily registered and are remitting to us now … even though they’re not required to,” Mastin said. “We get approximately $44 million a year, state and local, from that.”

Facing a hole in next year’s state-appropriated budget of $1.3 billion, the Republican-led Legislature is looking for ways to capture additional revenue through the existing sales tax, which is seen as preferable to a standard tax increase, which would require a super-majority vote. Another bill seeking to expand the nexus to qualify more retailers is scheduled for a hearing later this week in a Senate committee.

Other ideas being discussed in closed-door budget negotiations among the House, Senate and governor’s office including expanding the existing sales tax to some services that aren’t taxed, such as legal and medical services, landscaping and advertising sales. In her executive budget, Gov. Mary Fallin proposed capturing $200 million a year by applying sales taxes to more services, although she didn’t specify which ones.



Senate Bill 1301: https://bit.ly/235ZX8X

House Bill 2531: https://bit.ly/1QIfL8K


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