Guy W. Farmer: Online purchases: Collect the sales tax

As the Nevada Legislature struggles with a huge budget deficit in its final days, I wonder why lawmakers don't close a flagrant existing tax loophole by charging sales taxes on purchases made on the Internet. Closing this loophole would raise more than $32 million for the state treasury over the next two years. Go for it!

A recent Reno newspaper editorial argued that it makes no sense to exempt online retailers from the sales tax obligation facing every other retailer in America.

"The law on paying the sales tax is clear," the editorial asserted. "If you buy something, regardless of where or from whom, you owe (the tax)."

Period. It's only fair to require all retailers to play by the same tax rules. After all, why should you pay sales tax if you shop locally (which helps our local economy), but avoid the same taxes by buying online? That isn't fair and it's time for the Legislature to close the online tax loophole.

To its credit, the Nevada Retail Association is proposing legislation that will clarify existing law to require that everyone who sells something in Nevada, whether on Carson Street or in cyberspace, to collect sales tax. The association estimates that such legislation would raise an additional $16 million per year for our state's cash-strapped general fund. As you probably know, the general fund finances public education and other essential public services in our state.

The final solution to this revenue issue rests with Congress. Nearly 20 years ago, before Internet shopping became popular, the U.S. Supreme Court ruled that mail order companies only had to collect sales taxes when they had physical operations in a state. Congress then told the states to agree on common rules and definitions for collecting sales tax, which Nevada and many other states did by approving the so-called Streamlined Sales Tax Compact. Congress should now act to apply the federal Tax Compact uniformly in all states.

A glaring example of lost sales tax revenue in Nevada is provided by the huge Amazon.com distribution center in Fernley. Amazon, which certainly has physical operations in the Silver State, should start paying Nevada sales tax, and the sooner the better. There is no valid reason why Amazon.com should be a tax-free zone in a state struggling with a huge budget deficit.

Nationally, many states and municipalities are going after what they call "unpaid sales tax." Not long ago MSNBC reported that these "unpaid" taxes are worth billions of dollars to states and cities. The problem is that states cannot legally require out-of-state retailers to act as tax collectors. But they could move immediately against in-state cyber retailers, such as Amazon.com, which is exactly what the Nevada Legislature should do before it adjourns.

And finally, Congress should change the law by shifting the burden of collecting online sales tax from consumers to the retailers themselves. That would be the American Way because everyone would be playing by the same rules.

• Guy W. Farmer, of Carson City, rarely shops online (Surprise!).