Online retail giant Amazon could soon start charging sales taxes to Oklahoma customers – a move that would help fill a sizable state budget shortfall for next fiscal year, Oklahoma Watch has learned.
An Oklahoma Tax Commission official said the agency is in discussions with online retailers to voluntarily collect sales and use taxes, and two state legislators said they expect agreements could be struck in coming weeks or months with Amazon, the country’s largest e-commerce site.
The Seattle-based company recently announced it will begin collecting and remitting sales taxes in 10 new states, including nearby Missouri and Iowa. That brings the total number of states to 39 where customers are subject to that tax.
Oklahoma could join their ranks, officials said, and that could potentially send an infusion of cash that would impact this year’s fiscal budget, as well as the estimated $870 million budget shortfall the state faces next year.
“I am very optimistic we will have a deal with Amazon and that will help us a lot,” said Sen. David Holt, R-Oklahoma City. “They are the single biggest online retailer and that would be great for the state’s revenue situation if that were to happen.”
Amazon officials could not be reached for comment. Michael McNutt, a spokesman for Gov. Mary Fallin, said the governor’s office has been in “continuous talks” with Amazon. He, however, did not say whether a move by the retailer was imminent or not.
Oklahoma Tax Commission spokeswoman Paula Ross said she can’t talk about conversations with specific companies because of privacy restrictions. But she too said state officials have been in contact with the 500 biggest online companies, including Amazon, following the passage of last year’s Retail Protection Act.
That measure requires online retailers to either start voluntarily collecting the sales tax or notify their customers of the existing – yet seldomly followed law – that it is the customer’s responsibility to pay the tax when a merchant doesn’t have a physical presence in the state.
The idea behind the law is that it would easier for the companies to begin collecting and remitting the tax to the state rather than notify customers. It also includes an incentive that retailers that voluntarily collect the taxes by May 1 would be protected from paying previous uncollected sales and use taxes owed to the state.
Ross said her agency has been working on securing agreements with top retailers for them to start collecting the tax as soon as possible.
“We feel like we are working toward that goal,” she said. “And we are hopeful that it will occur.”
Rep. Chad Caldwell, R-Enid, who sponsored the Retail Protection Act, said he, too, expects Amazon and other out-of-state Internet retailers to begin collecting sales tax by the May 1 deadline. And he said he is optimistic there could be an announcement from Amazon within the “next month or two.”
Ross said such a move would increase revenue collections as early as the current fiscal year, which ends June 30. But how much in state revenue that could bring is unknown, she said.
Ross said the state doesn’t provide estimates for how much revenue the state is missing out on annually from specific companies. But a seven-year-old report, which hasn’t been updated, pegged the total at nearly $300 million if all out-of-state Internet sales and use tax revenues were collected each year.
She said that amount of new revenue the state could see if all major online retailers came on board is likely lower now because many smaller retailers have voluntarily collected the tax in past years. But she said the total amount is still likely in the area of “hundreds of millions” of dollars that the the state is currently forgoing.
Note: This article was updated Wednesday evening with comments from Gov. Mary Fallin’s office.