"Amazon tax" payoff starts to arrive in some U.S. states

Wed Feb 20, 2013 6:06am EST
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By Nanette Byrnes

(Reuters) - Sales tax from Internet commerce, a prize pursued for years by U.S. state governments, is starting to arrive in California and a few other states, providing millions of dollars in new revenue, though not as much as a benchmark study once forecast.

After fighting hard to get e-tailers such as Amazon.com Inc to start charging sales tax, and eventually passing a law requiring collection, the California Board of Equalization reported last week it took in $96.4 million in September-December 2012, its first full quarter of collections.

Coinciding with the holiday shopping season, that result put the state well on its way to meeting its forecast budget of $107 million in new e-taxes for the fiscal year that began July 1, 2012, as set by the California Department of Finance.

But that revenue falls far short of ambitious expectations set in 2009 by a University of Tennessee study that greatly influenced the online sales tax debate nationwide.

The study estimated that California, if it did not act to collect more online sales tax, would miss out on as much as $1.9 billion in 2012 revenue. Nationwide, it estimated, states would fail to collect $11.4 billion in 2012.

The Tennessee study fueled states' demands in recent years for more tax power over online commerce. Like California, more states will be collecting new e-revenues in months ahead. So it is too soon to make firm judgments, but early results suggest the Tennessee study and others like it were over-ambitious.

"To the extent the estimates being used are overstating reality, and I think they are, it is not solving anyone's deficit problem," said Jeff Eisenach, a managing director at economic research group Navigant Economics.

Eisenach co-authored a study on e-commerce and sales tax and said he advises being "conservative rather than hopeful."   Continued...

A driver delivers two packages from Amazon.com in Boston, Massachusetts in this July 26, 2011 file photo. REUTERS/Brian Snyder