Sales tax from online retailers tops $19 million
West Virginia collected more than $19.6 million in sales taxes from online retailers in the just-completed 2013-14 budget year, according to deputy revenue secretary Mark Muchow.
That’s up considerably from past years, thanks to legislation passed in the 2013 regular session that requires online retailers that have a “brick-and-mortar” presence in the state to collect the 6 percent sales tax on orders shipped to state residents.
“It’s going up from the $3 [million] to $5 million a year we were collecting a couple of years ago,” Muchow said.
Under the law, companies that operate retail outlets, warehouses, distribution centers or other places of businesses in West Virginia are required to collect and remit state sales taxes on online orders to state residents.
That includes an Amazon distribution center near Huntington and the $150 million Macy’s distribution center outside of Martinsburg.
A fiscal note in 2013 estimated the new law would produce $7 million to $10 million of additional sales tax collections a year.
In addition to the legislation, Muchow said a number of large retailers are voluntarily collecting and remitting sales taxes for states participating in the Streamlined Sales Tax Agreement. West Virginia is one of 24 states participating in the agreement, designed to simplify sales tax collections for online and catalog sales.
“Some have to, and some chose to,” he said of the numbers of retailers collecting taxes on online transactions.
The $19.6 million amounts to about 1.5 percent of the total of $1.17 billion of state sales tax revenue collected in the 2013-14 budget year, Muchow said.
However, it’s just a fraction of the estimated $50 million to $100 million a year of potential state revenue if sales taxes were collected on all online sales transactions to state residents, he noted.
That would require passage of the Marketplace Fairness Act by Congress. Since 2011, various versions of the bill have been introduced, but none has passed in either house to date.
Reach Phil Kabler at firstname.lastname@example.org or 304-348-1220.