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Alabama Losses Due to Internet Sales

  • Feb 24, 2012 | Susan McLain

The University of Alabama in Birmingham (UAB) School of Business recently completed an analysis of the impact of sales tax-free purchases over the Internet. According to Professor Robert Robicheaux, Ph.D., chair of the Marketing, Industrial Distribution and Economics Department in the UAB School of Business, the “…failure to collect taxes owed from Internet sales will cost the United States an estimated $10 billion this year,” and UAB News says the victim is your community.

Sales taxes support communities and Dr. Robicheaux states, “These are taxes owed to municipalities, counties and states….This problem demands immediate attention nationwide because the share of Internet retail sales is growing at such a breakneck pace that the amount of lost tax revenue will be doubled by the end of the decade.”

The University of Alabama report indicates that “…state, county and city governments are losing about $100 million a year in uncollected taxes on Internet sales, $1 billion every five years. In addition, the state is losing the potential to add 3,500 to 4,000 jobs a year because of the loss of retail sales.”

Last year, “…Alabama taxpayers sent the state $700,000 …in sales taxes on Internet purchases,” but not everyone realizes that they owe. Robicheaux says, “there are a lot of people walking around who really just believe that if the company that sells it to them doesn’t charge them sales tax, then they don’t owe it. That is not true.”

In addition to the challenges of being informed of the due use tax on Internet purchases, retailers have complained that “…some people use their stores as showrooms to check out an item and then go online to buy it [at] a discount from a big Internet retailer who can sell for less because they move a lot of merchandise.”

The Alabama report says that “…Census data shows that 5 percent of all retail sales occur online,” and report author Robicheaux “…believes the dollar volume will grow about 7 percent a year. By 2020, one out of 10 purchases may be made online.”

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Avalara Author
Susan McLain
Avalara Author Susan McLain
Susan McLain began her career as a technical writer in technology industries such as satellite networking and medical devices. Her skills encompass technical and marketing writing, usability engineering, verification and validation testing and protocol writing, requirements development, business analysis, technical illustration/graphic design and marketing. She has owned her own business providing service to small to medium sized business and in other positions, she has been in project management, documentation and marketing. She is currently the content specialist for Avalara helping to “make sales tax less taxing.”