The Internet tax man cometh

Nevada Gov. Brian Sandoval and Internet sales giant Amazon announced an agreement Monday under which the company will begin collecting and remitting sales taxes on Internet sales to Nevadans.

Collections will begin in 2014.

Assemblyman Pat Hickey, R-Reno, argues the levy is not a new tax but “one that should have been collected anyway.” He called the deal an acknowledgement by Amazon that it could not win a court case if Nevada sued it for taxes due. New Mexico last week won more than $500,000 in past taxes from bookseller Barnes & Noble.

In addition, Gov. Sandoval and Amazon’s Paul Misener said they will work together to encourage Congress to pass a law allowing the states to collect sales taxes on all Internet purchases.

“The only way to completely resolve this issue is for Congress to enact legislation that … grants states the right to require collection by all sellers,” Gov. Sandoval said in a statement, also thanking Amazon “for creating jobs and investment in Nevada.”

Amazon has a distribution center in Fernley and a subsidiary, Zappos, in Las Vegas. Such brick-and-mortar presence in the state creates a nexus which would have made it easier for the state to prevail in any collection action.

The Sandoval administration estimates the tax agreement will bring in at least $16 million a year. The 50 states are estimated to lose about $23 billion a year in uncollected sales taxes on Internet purchases. At the time of the 2010 election, studies showed Nevada was losing $114 million a year in uncollected Internet sales taxes.

The parties were free to enter into such a voluntary agreement, of course. And yes, the taxes have technically been due already – at a state rate of 6.85 percent, which increases to 8.1 percent with local add-ons in Clark County.

Brick-and-mortar businesses complain they suffer a disadvantage by being required to collect the tax when online competitors are not. They may have a point. But whether a nationwide regime will come about as quickly – or function as smoothly – as the parties imply is another question.

Many politicians, including Republican presidential front-runner Mitt Romney, oppose Internet taxation, not only because it imposes new regulatory and overhead burdens, but also because determining exactly where a cyber transaction occurs is not always simple.

Nevada voters in 2008 and 2010 overwhelmingly rejected ballot questions that would have made it easier for the Legislature to quickly implement Internet sales taxes. Politicians can be expected to see no down side to new pots of money. Those who try to make ends meet by selling goods online may take a different view.