The scenario described by Play It Again Sports’ owner Bob Ruer happens all too often in local businesses.
A customer comes into his Crystal Lake store, looks around, maybe tries out the wares, and then heads home to buy the same product online. Why? Because Internet retailers aren’t required to collect sales tax at the buyer’s local rate.
U.S. Sen. Dick Durbin, D-Ill., is pushing to end that with the Marketplace Fairness Act. We support Durbin’s effort and encourage lawmakers in Washington to pass the act.
The legislation would put the initial costs on the states to provide retailers with the appropriate software to collect taxes. Internet retailers with less than $1 million in annual sales would be granted an exemption.
Opponents of the bill, including large online retailers such as eBay and Overstock.com, have taken issue with the $1 million exemption and suggested it should be bumped higher.
The bill has the support of big-box stores such as Walmart, Best Buy and Target and online giant Amazon.
Beyond the unlevel playing field for businesses, the situation causes the state of Illinois to lose out on a great deal of revenue.
Now, Illinois taxpayers are on an honor system when it comes to paying state sales tax for online purchases. Residents are supposed to note the sales tax they owe from Internet purchases on their state income-tax return. Durbin estimates that only 5 percent of Illinois taxpayers do so. Gov. Pat Quinn said the state stands to collect an additional $200 million annually in sales-tax revenue if the bill passed.
This is not a tax increase. It’s not a new tax. These sales taxes and tax rates are already in place.
This is a needed law to level the playing field for local businesses who’ve been good corporate citizens, hired local employees and paid property taxes that support local schools and other taxing districts.