State Struggles To Enforce Online Sales Tax

Millions of Americans are shopping online for Cyber Monday, but that also means the state could be losing millions of dollars in sales taxes.

If you make a purchase from a store that does not have locations in Oklahoma, you likely will not see sales tax when you check out, but it is still up to you to pay that money to the state.

Sonya Walker depends on online sales to keep her Midtown boutique The Beauty Lounge up and running. She was in the store on her off day, packing up orders for Cyber Monday.

“Around the holidays, it’s more online than it is in-store, so even though maybe only a few people come in during the day, online sales have been really great,” she said.

Walker charges sales tax for her Web customers living in Oklahoma, but not for customers elsewhere. Still, some find their way around the system.

“They might order while they are in Texas and then pick it up when they arrive here. That way they don’t have to pay shipping or tax. Some people just have different ways of doing what they do,” she said.

State Auditor Gary Jones said the tax does not disappear, and still needs to be paid later.

“They’re required by law to do it,” Jones said of online shoppers. “It doesn’t mean that they are.”

Jones said the responsibility falls on the customer to file unpaid sales tax on their annual return, but only an estimated 4 percent of Oklahoma taxpayers actually follow through.

On Nov. 1, a new law went into effect, giving out-of-state retailers the option to either charge sales tax for Oklahomans upfront or send the customer a notice by Feb. 1 telling them how much they owe, just like a 1099 tax form.

Jones admits the law will be hard to enforce, but said it is desperately needed. Sales tax revenue makes up $2 billion of the state budget, and in October there was a 7 percent shortfall.

“We have teachers that are underpaid,” said Jones. “We have agencies that are trying to deliver services and they don’t have the funds necessary to do that, so I think it is a big issue right now.”

The online sales tax debate will likely come up again in the next legislative session. For now, Jones believes the new notification system is a step in the right direction.

“If people understand that they owe the tax, then I think it goes a long way toward people actually submitting that tax,” he said.