ST. PAUL, Minn. - As internet sales increase on websites like amazon.com, pressure is building for an online sales tax.
Dan Marshall, co-owner of Peapods, a toy and baby care store in St. Paul, is among those calling for change.
"It does affect us with every sale that we make. We're charging seven percent that Amazon isn't charging," said Marshall.
Both Minnesota's U.S. Senators are backing the Marketplace Fairness Act, a bill receiving bipartisan support as more and more states see potential sales tax revenue being lost to e-commerce.
"In 2011 we estimate we lost about $400 million dollars in sales tax revenue to people who are buying on the internet from out of state retailers," said Myron Frans, Minnesota Commissioner or Revenue.
Currently online retailers are required to collect sales tax revenue only for states where they operate stores or have some other sort of presence.
Frans says that creates an unfair situation for Minnesota-based companies like Target and Best Buy which not only collect sales tax, but also pay income and property taxes to support state and local services.
"The least we can require from out of state retailers is to pay the sales taxes in Minnesota," said Frans.
By law, Minnesotans purchasing more than $770 worth of merchandise online in a calendar year are supposed to fill out forms and submit sales taxes to the state. Fewer than 800 people did so in 2010, according to the Department of Revenue.
And as for the others: "Well, we might not find you right away, but we're trying to figure out ways to find those folks, actually what we really hope is that the law changes so we don't have to go looking for people," said Frans.
Despite the measure's building momentum, critics call it an over-reach of government that will create burdens on companies engaging in e-commerce.
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