State looking to offer multimillion carrot to online retailers
Utah is looking at sweetening the deal for online retailers who collect sales tax on Internet sales from Utah customers, offering to let the merchants keep a piece of the tax collected.
Rep. Steve Eliason, R-Sandy, is proposing HB300, letting online sellers keep 18 percent of the sales tax revenue they collect. Because only about 1 percent of buyers currently file and pay their tax on online sales.
Eliason says that, even with the incentive, it would be a windfall for the state to the tune of about $31 million annually.
"It does not raise taxes," Eliason said. "It helps us collect taxes that are due and payable to the state of Utah."
The incentive would be eliminated if the federal government enacts some national legislation that would bring conformity to online sales tax laws.
Initially, Eliason had proposed letting retailers keep half of the taxes they collect, but he amended the bill to let them keep 18 percent, which he said he figured was an adequate incentive.
Mark Griffin, general counsel for Overstock.com, called Eliason's bill an "innovative solution to a very thorny problem." He said he views the 18 percent incentive as attractive to companies, but not overly generous.
Retailers with brick-and-morter stores in Utah are allowed to keep 1.31 percent of sales tax collection to compensate them for the trouble.
The Senate Revenue and Taxation committee passed HB300, moving it to the full Senate for consideration. The bill passed the House last month.