Minn. business leaders step up push for state to force online retailers to collect sales tax

ST. PAUL, Minn. — Representatives of Minnesota businesses large and small ramped up pressure on state lawmakers Thursday to collect sales taxes on purchases made through online-only retailers.

The public push included an all-hands-on-deck news conference outside a small St. Paul toy store. It comes with time winding down on the 2012 session. The plan has bipartisan backing and support from Gov. Mark Dayton’s administration, but advocates worry it is stalled.

State Revenue Commissioner Myron Frans said Minnesota could expect about $4 million next year and more later if purchases made through Amazon, Overstock.com and others had Minnesota tax applied.

State Revenue Commissioner Myron Frans

The debate over whether online retailers must collect taxes from customers in other states centers around a decades-old U.S. Supreme Court decision involving a mail-order company. In that case, the court said retailers only have to collect state tax if they have a physical presence in a state, such as a retail store.

Amazon has argued for finding a federal solution rather than state-by-state laws on sales taxes on Internet purchases. But the company has reached deals with some states, including California.

Minnesota supporters contend it is about enforcing an existing sales tax and erasing a competitive price advantage now held by online-only retailers. Skeptics see it as a new tax affecting savvy shoppers, with millions of dollars at stake.

House Speaker Kurt Zellers said he too sees the tax as a compliance measure. But he suggested proceeds should go toward cutting tax rates — not to put more money in government coffers. He also said the tax measure should be part of a broader tax deal between the Legislature and Gov. Mark Dayton.

Dan Marshall, who runs the toy store, said leveling the playing field is vital to maintaining businesses like his.

“The Internet is a big enough entity,” he said. “It can take care of itself now.”