LINCOLN, Neb. (AP) — Nebraska moved one step closer Monday to collecting online sales taxes from all out-of-state companies in an effort to capture millions of dollars lost every year from buyers who don’t pay the tax.
Lawmakers gave first-round approval to a bill that would require online retailers such as Amazon to collect sales taxes from their own sales as well as from third-party sellers and turn the money over to the state.
The measure advanced on a 44-0 vote. It would go into effect April 1 if it advances through two more votes and is signed by the governor.
The Nebraska Department of Revenue has already told online businesses to start collecting sales taxes on orders placed within the state, but senators haven’t passed a formal law to require it.
“These sellers have had an advantage over brick and mortar retailers for a long time,” said state Sen. John McCollister, of Omaha, the bill’s sponsor.
Nebraska currently requires taxpayers to report their total online purchases and pay the sales tax when they submit their annual state income tax returns, but few people follow that law and it’s difficult for state officials to enforce. By requiring retailers to collect the tax when the purchase is made, lawmakers hope to capture all of the revenue.
The bill was introduced in the wake of last year’s U.S. Supreme Court ruling that lets states tax online sales from out-of-state businesses. Small sellers with $100,000 or less in gross sales or fewer than 200 separate transactions are exempt under the legislation.
State officials predict the sales taxes will generate $30 million to $40 million a year, but Nebraska State Tax Commissioner Tony Fulton warned lawmakers in February that they’ve already factored that revenue into the state budget. Fulton, an appointee of Gov. Pete Ricketts, said he doesn’t expect an influx of money beyond that amount.
The Legislature’s budget-watching Fiscal Office disagrees with Fulton, predicting that online sales taxes would generate an additional $17.9 million for the state’s general fund over two years.
Any extra revenue collected would go into the state’s general fund and two other funds that help pay for road construction projects. Some lawmakers said they’d like to see the money used to lower property taxes.
“I’ve always maintained that any new revenue flowing from (online sales taxes) ought to be directed to property tax relief,” said Sen. Tom Briese, a farmer from Albion. “That’s what Nebraskans expect and that’s what Nebraskans deserve.”
Sen. Lou Ann Linehan, chairwoman of the Revenue Committee, said the extra taxes will probably get steered into a tax credit for property owners to help offset their bills.