LANSING - Less than a year ago, Michigan joined other states in a new streamlined sales tax system to encourage online retailers to collect and remit sales taxes to states, and the new system has thus far netted Michigan $5.5 million in sales tax revenues.
Added to that is another $2.4 million in revenues from online retailers who had already identified themselves as collecting and remitting the taxes to help get the streamline system underway.
States that are members of the streamlined sales tax group are meeting this week in Bismarck, North Dakota, to discuss the system and enact possible changes.
Michigan is one 13 states considered full members of the system. The other states are Indiana, Iowa, Kansas, Kentucky, Minnesota, Nebraska, New Jersey, North Carolina, North Dakota, Oklahoma, South Dakota, West Virginia. There are also six states considered associate members of the program: Arkansas, Nevada, Ohio, Tennessee, Utah, Wyoming. Other states with sales taxes are considering the program.
While a U.S. Supreme Court ruling held that states could not compel catalog and online retailers to collect and remit sales taxes, and Congress has been reluctant to direct collection of the taxes, with the growth of Internet retailing finding a way to collect the sales taxes was considered critical. Under the project, all the member states have made adjustments to their sales tax systems to simplify the process for companies to collect and remit the taxes.
The project also grants amnesty to all retailers who register with the states by October. Under the amnesty, those retailers would not have to pay taxes, along with penalty and interest, for the time they were unregistered in the state.
So far, according to Terry Stanton of the Department of Treasury, the state has 743 registrants.
Through August 19, the state has collected $5.5 million in sales and use taxes through the streamlined system, Stanton said.
When the system took effect nearly a year ago, state officials cautioned against hopes the state might see a "bucket of money" soon. Admittedly, the total $5.5 million is a small amount compared to the $6.9 billion in sales taxes collected during the 2004-05 fiscal year.
But state officials have previously estimated that long-term Internet purchases could cost the state as much as $600 million annually in sales tax revenues.
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