The legislature is grasping at straws in an effort to balance the budget and one way to do that or to act like they are doing that is to pass laws that can't be enforced but will provide an estimate of cost savings or income.
Such is HB2531 that will probably be signed by Fallin even though it is nothing more than a resolution "asking" out of state companies to voluntarily collect and remit Oklahoma sales tax on online purchases shipped to Oklahoma. It also asks these same unknown companies to send annual statements to their customers in Oklahoma reminding them of how much they owe the state. Representative Chad Caldwell, a Republican from Enid thinks that Oklahoma businesses are at a disadvantage with out of state retailers that don't charge sales tax and the moron is convinced, and has convinced others, that "tens of millions of dollars" will flow into state coffers without any enforcement measures.
First, how do you know who these out of state retailers are? Second, without the retailer having an Oklahoma Sales Tax account how do these retailers go about computing the tax which varies from city to city and how do they go about sending Oklahoma the money?
Then there is the legality of taxing businesses outside the state. The 1992 Quill Supreme Court decision said that states cannot tax a business that isn't located within the state's borders. And just last year in Direct Marketing Association V. Brohl the Supreme Court upheld a challenge to an identical out of state internet sales tax law from Colorado. This so called "Amazon tax" required the out of state retailers to notify in state customers of the use tax obligation and to provide the sales data to the Colorado tax commission. It was challenged by DMA as a violation of the Interstate Commerce Clause.
A local court enjoined the Colorado law but the Tenth Circuit struck it down as federal law is limited in enjoying or restraining the collection of tax where a remedy may be had in state court. The Supreme Court overrode the Tenth Circuit and allowed the lawsuit to proceed.
Then there is this fallacy that brick and mortar stores are somehow harmed by not being able to compete with online stores due to sales tax. The sales tax on a product usually pales in comparison to the shipping charges. A bulky item like a set of suitcases is going to cost at least one third to one half of the actual cost of the product to ship to a consumer's home. The local store does pay freight to get the product to the store but it on company trucks or commercial truck line by the pallet with cheap per item rates. So that $75.00 suitcase bought locally is going to have a $6.56 sales tax added and the same suitcase from the online retailer is going to have a $30.00 fee added.
That same suitcase came in on a company truck or pallet with dozens of other suitcases and might have $5.00 shipping embedded in the price.
Sure, there is Amazon Prime, free shipping, that you pay a large fee for up front and they bury the cost of the shipping in the retail price or the seller accepts much smaller profit margins hoping to make it up on volume. Either way the shipping company gets paid.
Rep. Caldwell is just setting the state up for a lawsuit, one that Oklahoma will lose if it tries to bully out of state companies into paying sales tax. He is also helping push for the collection of internet use tax collections from Oklahomans, of which it has been said pay only 4% of the tax obligations on their online purchases. Guess what? It seems the public doesn't want to pay the use tax so being known as the guy pushing for enforcement might generate a primary opponent. Rep. Caldwell is an idiot.
