Businesses may charge online tax
PARKERSBURG – Taxing online sales leves the playing field for retailers, lawmakers and businessmen say.
The West Virginia Legislature passed the bill, HB 2754, during this past regular session. The bill requires online retailers to start applying West Virginia’s sales tax if they or a subsidiary have a physical presence in-state.
The bill was approved by the governor on Tuesday. It is effective July 12. Amazon.com recently opened a customer service center in Huntington.
A complaint from a number of companies here is they have to charge sales tax while the Internet companies do not.
The bill passed the state Senate 34-0 and passed in the House of Delegates 84-12 with four delegates not voting on it.
All of the delegates and senators representing Wood County voted in favor of the bill.
Delegate Dan Poling, D-Wood, said the bill helps small businesses around the state.
Poling felt Internet retailers were getting an unfair tax break in the state, which amounted to an unfair advantage.
“Small businesses are struggling,” he said. “Many of these businesses have played by the rules for years.
“This bill does not give some an unfair advantage over others.”
Delegate Bill Anderson, R-Wood, said it was a “matter of fairness.”
There are a number of businesses in the state, with physical locations in West Virginia, who retail to the public and have to pay the state sales tax.
“Those businesses are already at a 6 percent disadvantage to Internet retailers,” Anderson said. “These are the businesses that provide jobs to many of our communities.
“This bill helps put everyone on a more level playing field, he said..”
With Internet sales on the rise, there has been an erosion of the state sales tax collections and the state having difficulty meeting the cost of basic services.
The state’s budget had to be cut by 7.5 percent, which will result in higher tuition costs to college students to make up some of the cuts made to higher education.
Collecting sales tax from all businesses in the state with physical locations here will help make up some of the lost revenue the state has to deal with, Anderson said.
“It is a matter of fairness to businesses as Internet sales continue to increase,” he said.
Sen. David Nohe, R-Wood, said if a company has a physical location in West Virginia it is doing business from then it needs to charge the sales tax, then it doesn’t need to charge the sales tax.
There is a move in the U.S. Congress to put a sales tax on everything sold online, Nohe said.
He is hopeful it will not pass.
Many lawmakers looked at the state’s bill as a way where the sales tax would only apply to companies with physical locations in the state and the state would not try to get into trying to collect from companies elsewhere without a physical location here.
“Many looked at it as a compromise,” he said.
Delegate John Ellem, R-Wood, said there was a concern by many over fairness in that many retailers in the state already have to factor that tax into the price of doing business and it impacts the prices retailers charge. Many felt there was an unfair advantage for Internet retailers who did not have to factor in that tax.
“Many businesses already have the cost and burden of figuring out that tax and getting it to the state,” he said.
Ellem said he had received a number of emails in support of this bill from people around the state. He did not receive anything from anyone opposed to it.
“This bill evens the playing field,” he said.
Local business leaders have said the bill puts businesses on more of an equal footing across the board.
“This legislation is intended to make a more level playing field between local retailers and out-of-state online retailers with regard to sales tax requirements,” said Jill Parsons, president/CEO of the Chamber of Commerce of the Mid-Ohio Valley. “If an online retailer has a physical presence in the state, they are already collecting sales tax on purchases made in their storefronts; this legislation would also require the retailer to collect sales tax on online purchases made by residents.”
Online retailers historically argued that collecting state-specific sales tax was a burden, Parsons said.
“With computerized programs, state interfaces and the national Streamlined Sales Tax Agreement adopted by many states including West Virginia, this argument is essentially negated,” she said. “This legislation is a component of the national Marketplace Fairness Act and as the name implies is designed to make commerce fair across all forms and markets.”
The legislation is still awaiting the governor’s signature to be passed into law.