December 1, 2013 in Idaho

Eye on Boise: Idaho missing out on online sales tax

By The Spokesman-Review
 

BOISE – Idaho’s state Tax Commission has a message for all those holiday shoppers making their purchases online: You still owe Idaho tax.

If the online retailer doesn’t charge the tax, Idahoans are required by law to pay it when they file their income tax returns. The 6 percent tax in this case is called a “use tax” rather than sales tax.

More than 9,600 Idahoans paid the tax on their 2012 state income tax returns, remitting more than $544,000. But that number is likely just a fraction of what is owed.

The law’s been on the books for years, since long before there was an Internet. Ever since Idaho’s 1965 sales tax law, Idahoans who buy items from remote sellers – like catalog or Internet retailers – and don’t pay the state’s sales tax are supposed to report those purchases and pay the tax each year on their state income tax returns. Few do, however.

In tax year 2011, 9,555 Idaho tax returns reported “use tax” on such purchases, averaging $56 per return. But there were about 700,000 returns in all, putting compliance at a measly 1.4 percent. And that’s up from previous years; in tax year 2010, 8,900 returns reported use tax averaging $53, and in tax year 2009, there were 8,200 averaging $48.

The Idaho Legislature has been debating the issue for years, pushed in part by Idaho retailers who complain that customers come in and browse their goods, then make their purchases online to avoid the state sales tax – sending those dollars out of state.

This past year, the House Revenue and Taxation Committee voted 10-5 against introducing a bill to set up the state to collect the tax directly from retailers if Congress gives the OK.

Freshman Rep. Lance Clow, R-Twin Falls, the bill’s sponsor, said the latest estimates are that Idaho citizens are spending $1.08 billion on Internet purchases a year – all of which is supposed to be subject to the state’s 6 percent tax. That would mean the state is missing out on nearly $65 million a year in taxes that legally are due and payable. Plus, he said, e-commerce is growing at two to three times the rate of traditional retail sales, so the tax gap will continue to grow.

His bill was backed by the Idaho Association of Counties, the Association of Idaho Cities, the Idaho Association of Commerce and Industry, the Idaho Chamber Alliance and the Idaho Retailers Association.

For now, Idahoans are required to report and pay the tax themselves. As the holiday shopping season gears up, Randy Tilley, the Tax Commission’s audit division administrator, said, “We encourage folks to keep track of their untaxed purchases, total them up at the end of the year, and make a payment when they file their income taxes next year.”

The tax applies to purchases that Idahoans make from remote sellers, “if the goods are used, given away, stored or consumed in Idaho.”

Why the turkeys

Here’s something to ponder this Thanksgiving holiday: Wild turkeys are found across Idaho, and there’s even an open hunting season on them right now in the North Idaho Panhandle. But they’re not native to the state. Turkeys actually were introduced by Idaho Fish and Game in 1961, a move that once was a common part of wildlife management in the state.

“Turkeys have adapted so well in northern Idaho, they have become a nuisance in some locations,” Fish and Game reports. “Wild turkey populations in Idaho are largely found in the Panhandle, Clearwater and Southwest regions and parts of the Southeast Region.”

Other species Fish and Game has introduced over its 75-year history include chukar, Gambel’s quail, California quail, walleye, crappie, bluegill and tiger muskie. But there have been some that haven’t gone so well, too, including the introduction of mysis shrimp in North Idaho lakes, which shifted the lakes’ ecosystem in ways that hurt native bull trout and kokanee; and the introduction long ago of brook trout, which then competed with native fish species.

Reports Fish and Game, “As the science of managing fish and wildlife has evolved, the practice of introducing new species to Idaho, without extensive analysis, is largely seen as a naïve and outdated practice.” But the turkeys are still here.

Ed board opening

Gov. Butch Otter is asking anyone interested in the opening on the state Board of Education to apply by Dec. 9. The opening comes after Otter appointed board member Ken Edmunds to head the state Department of Labor; the appointee will serve out Edmunds’ term, which runs through March 1, 2018, subject to state Senate confirmation.

Otter noted that state law says the best applicant must be chosen for the position, without regard to “locality, occupation, party affiliation or religion.”

To apply for the vacancy, send a resume and a letter of interest to the governor’s office, to the attention of Anne Beebe.

Staff writer Betsy Z. Russell can be reached at betsyr@spokesman.com or (208) 336-2854.


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