State officials say some major retailers have voluntarily begun paying sales taxes to the state on Internet sales. Iowa Department of Revenue director Michael Ralston says it’s a fairness issue. Iowa Department of Revenue director Michael Ralston says if you go to an Iowa store and buy a sweater, you are charged sales tax, but if you bought the same sweater over the Internet, the sales tax may or may not be charged. Iowa and other states are hoping the feds soon require all retailers to collect sales taxes on Internet purchases. Don Cooper of the Department of Revenue says officials have been meeting with Internet giants like Amazon to try to lay the groundwork, Cooper says it’s not a new tax, since consumers should be ‘fessing up and paying a “use tax” on Internet sales today — but few do. Cooper predicts Iowa will collect 10 to 15 million more in sales taxes from Internet transactions in the first six months of next year as more retailers start charging the sales tax.Cooper says some businesses will act voluntarily, but others won’t and that’s why they’re seeking a federal law to compel retailers to collect state sales taxes. Cooper says Iowa’s losing a huge chunk of change today.Cooper says a University of Tennessee study predicts Iowa will lose 260 million dollars in fiscal year 2006 because sales tax isn’t collected on remote sales. Cooper, though, guesses that figure would be closer to 160 million — money he ways the state could collect each year if Congress acts. In a related move starting this July 1st, Iowa tax rules will change as part of an effort to make all state’s sales tax charges the same, but Ralston, the department’s director, says Iowa consumers probably won’t notice. Ralston says retailers, though, will notice as some items that were subject to the sales tax will no longer be, while other goods that weren’t taxed will be. For example, chewing gum hadn’t been subject to Iowa’s five percent sales tax, but as of July 1st, it will. Ralston and other state tax officials plan meetings around the state over the next two months to help retailers make the tax changes. For more detailed information, check out www.state.ia.us/tax on the web.
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