Cumberland Times-News

Local News

November 24, 2012

Maryland online sales tax ignored

Comptroller says he won’t enforce law

WASHINGTON — As Marylanders join millions of others nationwide in the computer shopping blitz that’s become known as Cyber Monday, they should think about this: If they paid the sales tax they owe to the state for such purchases, Maryland would be $200 million richer.

The problem is, virtually no one pays, and the state’s top tax enforcement officer doesn’t believe they should.

Online buyers are supposed to pay sales taxes for their purchases by Jan. 21, 2013, one of the four deadlines a year for Maryland residents to file their “use tax.” This use tax is imposed on any purchase that is not taxed by the seller, whether it be out of a catalog, from an Internet retailer or even from a store in Delaware, which does not impose sales taxes. If the good is being used in Maryland by a state resident and has not been taxed, that person is required to pay the 6 percent tax.

State Comptroller Peter Franchot said between consumers’ lack of knowledge of this tax and an inability to enforce it, over 95 percent of the Maryland public is breaking the law. However, the comptroller said he would not enforce it.

“I am not comfortable in enforcing that and will not,” said Franchot, who said it is not the citizen’s fault there is not a “sensible” compliance program for online sales tax. “The collection of sales tax is a responsibility of government and industry, not the consumer.”

This use tax is almost impossible to enforce, Franchot said, and is costing the state around $200 million a year in tax revenue, with that number only increasing as e-commerce grows.

The comptroller’s office estimates that by 2020 the lost tax revenue will be more than $310 million.

Even if this lost tax revenue was collected, Franchot said it’s unlikely that other tax increases, like the recent tax hike on those making $100,000 or more, would go away.

“Maryland has an insatiable appetite to raise taxes, so I would doubt that the Internet tax revenues would substitute for some other tax increase,” said Franchot. “They’d just do both.”

Dee Hodges, president of the Maryland Taxpayers Association, said her organization opposes the use tax, saying it is “more regulation of the Internet,” and “a way of shutting down commerce.”

If the tax replaced another tax in the state, Hodges said she would consider supporting it. Maryland already grossly overtaxes its residents, she said.

“Pretty soon they’ll have a bill to tax oxygen,” said Hodges.

Franchot said this problem is better solved by the U.S. government than the state, as it involves interstate commerce and companies outside Maryland’s jurisdiction.

For many bricks-and-mortar retailers, the issue is one of equality. They say they can’t fairly compete against online retailers who don’t charge sales tax, while the state’s physical retailers must.

Multiple bills in the House and Senate tackle this problem, including the Main Street Fairness Act, the Marketplace Equity Act and the Marketplace Fairness Act.

In the 1992 U.S. Supreme Court case Quill Corp. v. North Dakota, the court found that a business does not have to collect taxes on customer purchases unless it has a physical location in the state. However, Associate Justice John Paul Stevens wrote for the court “that the underlying issue is not only one that Congress may be better qualified to resolve, but also one that Congress has the ultimate power to resolve.”

U.S. Sen. Ben Cardin, D-Baltimore, is a cosponsor of the Marketplace Fairness Act, which was introduced over a year ago and is yet to come out of committee.

1
Text Only
Local News
  • Overturned tanker upsets Oakland Overturned tanker upsets Oakland

    OAKLAND — Two large commercial wreckers were being used at mid-afternoon Wednesday to upright a tanker full of liquid propane that overturned several hours earlier in downtown Oakland and forced evacuation of the business district.

    April 16, 2014 1 Photo

  • Park Service opens Canal Classrooms Park Service opens Canal Classrooms

    CUMBERLAND – The National Park Service held a ribbon-cutting event Wednesday for a new program called Canal Classrooms, which will offer students pre-K through fifth grade accredited classwork on the Canal Place grounds.

    April 16, 2014 1 Photo

  • CODY EVERSOLE Eversole named 2014 Kelley Award winner

    KEYSER, W.Va. — Keyser High School senior Cody Eversole was named this year’s J. Edward Kelley Award winner during a ceremony Wednesday morning at Potomac State College.
    The award is presented to an outstanding male student-athlete in each year’s senior class.

    April 16, 2014 1 Photo

  • South Cumberland home rebuilt after fire South Cumberland home rebuilt after fire

    CUMBERLAND — A South Cumberland home destroyed by fire last July was given a second chance recently after the owner decided he wanted to remain a part of the neighborhood and had his house rebuilt.

    April 16, 2014 1 Photo

  • Mineral BOE gives $18K to library

    KEYSER, W.Va. — The Mineral County Board of Education voted unanimously Tuesday to give the Keyser-Mineral County Public Library $18,000 for fiscal 2015 and to give the Piedmont library an additional $1,000 out of carryover funds.

    April 16, 2014

  • The Eichhorn family Local family says hosting New York City children in summer is ‘wonderful experience’

    CUMBERLAND — Sonya and Christopher Morgan of Cumberland always planned on a hosting a child through The Fresh Air Fund Volunteer Host Family Program. “Christopher always said once we had kids of our own we were going to do it. When our son turned 6 we said, ‘OK, let’s do it,’” said Sonya.

    April 16, 2014 2 Photos

  • City, county officials to talk baseball at work session

    CUMBERLAND — During today’s Allegany County Commission work session, a proposal to study the possibility of bringing a professional-level baseball team to the area will be vetted again, this time with participants from the city of Cumberland.

    April 16, 2014

  • Report: High-quality child care lacking in West Virginia

    CHARLESTON, W.Va. (AP) — Child care programs of minimum or unrated quality are watching over about 93 percent of West Virginia children enrolled in them, a report released Wednesday said.

    April 16, 2014

  • JIM HINEBAUGH Hinebaugh seeks Garrett County commissioner post

    Jim Hinebaugh recently announced his candidacy for Garrett County commissioner. A Garrett County native and lifelong Republican, Hinebaugh graduated from Southern High School and attended Frostburg State University before entering the U.S. Army via the draft. After serving as an enlisted member, Hinebaugh completed Officer Candidate School and was commissioned as a second lieutenant. He retired as a colonel/06 in 1995 with almost 29 years of service including eight years overseas.

    April 16, 2014 1 Photo

  • In Brief - 04/17

    April 16, 2014

Facebook
Must Read
News related video
Boston Bombing Survivors One Year Later Sister of Slain MIT Officer Reflects on Bombing Raw: Blast at Tennessee Ammunition Plant Kills 1 Raw: Urinator Causes Portland to Flush Reservoir Hoax Bomb Raises Anxiety in Boston New York Auto Show Highlights Latest in Car Tech Ex-California City Leader Gets 12 Year Sentence Obama, Biden Announce $600M for Job Grants Miley Cyrus Still in Hospital, Cancels 2nd Show New York Auto Show Highlights Latest in Car Tech Disbanding Muslim Surveillance Draws Praise Passengers Abuzz After Plane Hits Swarm of Bees Boston Bomb Scare Defendant Appears in Court Boston Officials: No Bags at Marathon Town, Victims Remember Texas Blast Freeze Leaves Florida Panhandle With Dead Trees At Boston Marathon, a Chance to Finally Finish Are School Dress Codes Too Strict? Suspicious Bags Found Near Marathon Finish Line Boston Marks the 1st Anniversary of Bombing