Like to think of yourself as patriotic? A good, law-abiding citizen? Pay your taxes.
Internet retail giant Amazon sent out notices this week to consumers who had any goods shipped to South Carolina, letting those purchasers know how much they bought in 2012 and reminding them that they still owe taxes on those purchases. It’s not just Amazon.
South Carolina requires shoppers to self-report the sales tax they didn’t pay for items bought out of state, and pay up when they file their income tax returns. That includes items bought online or through catalogs with no sales tax added. It also applies to shoppers who pay the sales tax of the state where the item was shipped, if that tax was lower than South Carolina’s 6 percent. The taxpayer is supposed to pay the difference.
Amazon’s notices are part of the deal struck when Amazon built a giant distribution facility in Lexington County in 2011. Amazon does not report the data to the IRS or the state Department of Revenue, meaning that paying the tax due on such purchases is basically on the honor system.
Not that the honor system has worked real well in the past. A 2009 report by e-commerce experts at the University of Tennessee estimated that the state would miss out on $569 million in sales taxes from 2007 to 2012 because consumers simply didn’t pay it. In 2010, half of one percent of the state’s individual tax filers self-reported they owed sales tax on out-of-state purchases. In other words, most people just ignore the rule, knowing that nobody will be checking up on it.
But, as the old chestnut goes, character is doing the right thing even when nobody’s looking. The state could certainly use that money to fix its crumbling roads and deteriorating bridges, to hire new teachers and police, or even to offset politicians’ annual plans to cut other taxes. Would it be easier if retailers collected the tax at the point of sale? Of course. And they should. But in the meantime, until it’s changed, following state law is still the right thing to do, whether anybody’s holding you accountable or not. Pay your taxes.