Marketplace Today Blog

By Don Walker
Milwaukee Journal Sentinel

CyberMonday, the day shoppers converge on the Internet to take advantage of sales, discounts and deals, proved to be a big success for retailers.

But it’s also costing Wisconsin and other states that collect sales taxes a lot of money.

A new estimate from the state Department of Revenue indicates the state is losing an estimated $150 million a year on items sold online in which the consumer or a business does not pay the state's sales tax.

The state’s sales tax is 5 percent on items purchased. In addition, some counties collect an additional sales tax.

The number is likely to grow. ComScore Inc., an online tracking company, estimated that online sales went up 6 percent on Monday to exceed $900 million, a new, single-day record.

With all that money being spent, there is also a lot of sales-tax money that states like Wisconsin are not getting.

Diane Hardt, administrator of the state’s Division of Income, Sales and Excise for the state Department of Revenue, said in an interview that such taxes are due under the law but are not being remitted.

“About one-third of this revenue loss is due from businesses who purchase taxable items via the Internet,” she wrote in an email. “Many of these businesses file sales and use tax returns but do not report all of their taxable Internet purchases. Two-thirds of the revenue losses are due from individual consumers who make taxable purchases.”

Hardt said Wisconsin’s income tax returns form has a line for consumers to report their sales and use tax obligations.

Nationwide, efforts are under way by states to set uniform sales-tax collection guidelines. Known as the Streamlined Sales Tax Governing Board, the group is working on proposed federal legislation that would require sellers and retailers to collect the sales tax.

In October, Wisconsin became the 20th state in the country to adopt the rules and regulations. Proposed federal legislation should be introduced in a few months, Hardt said.