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July 20, 2012 | By | Posted in General News

Only 1 in 50 filers voluntarily paid sales tax for online purchases

By Eric Boehm | PA Independent

HARRISBURG — Less than 1 in every 50 Pennsylvanians voluntarily complied with the state’s plan to collect “use tax” on income tax forms this year.

About 107,000 of the 6 million income tax returns filed for 2011 included payments of use tax, which must be paid on purchases made outside of the state — or online — when the sales tax is not paid at the time of purchase, according to the state Department of Revenue.

As of July 16, the state collected $3.6 million from the use tax this year, though that number could climb as some late returns continue to be filed.

The total from businesses will not be available until after Sept. 1.

“We’re definitely pleased about the number that we have in. It’s a good start,” said Maia Warren, a spokeswoman for the Department of Revenue.

The state included the use tax on income tax forms for the first time this year to get Pennsylvanians to remit those taxes voluntarily.

But even as it was preparing the new forms and beginning an educational initiative to inform taxpayers of that obligation, the Department of Revenue acknowledged that it would have a difficult time enforcing the law.

Simply put, the cost of investigating individuals who evade that tax is too high for the few dollars the state would collect.

Warren said no enforcement operations against individuals were planned at this time.

“At this point, it is an effort to draw awareness to it, and an effort to stimulate voluntary payment,” she said.

Instead, the state is focusing on collecting online sales taxes by going after companies that fail to remit those taxes.

The Department of Revenue published updated tax rules in December that seemingly expanded the state’s ability to enforce existing tax policy against online retailers operating in the state that did not pay sales tax.

At the time, Revenue Secretary Dan Meuser said the effort was part of a two-pronged approach — along with the self-reporting on personal income tax returns — to collect the unpaid taxes.

The department hoped to collect $5 million of an estimated $350 million in unpaid use taxes with the new policies.

Meanwhile, Congress is in the midst of a debate over how to handle state sales taxes for online purchases, which experts generally agree is a federal issue.

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Eric Boehm is a reporter for PA Independent. He can be reached at Eric@PAIndependent.com or at (717) 350-0963.

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