MONTGOMERY, AL (WSFA) -
It's something most of us probably don't think about when shopping online at popular sites like www.amazon.com
"We agree that it is a large number and we agree that it's growing each year. I assume that it's tax free and it really isn't not, the tax obligation is still there," Alabama Department of Revenue Tax Policy and Research Director Curtis Stewart said.
Stewart says if no tax has been collected by the online or catalog retailer, you have to report and pay what's called a use tax on those purchases.
"It's just that it's supposed to be paid by the user since the seller didn't collect it," Stewart said.
Stewart says in Alabama the challenge is a lot of sellers online don't have a connection to the state.
"They don't have any physical locations here. They don't have any warehouses here therefore we can't require them to pay the tax," Stewart said.
He says sellers complain Alabama has varying tax rates for every city and county.
"It's just so difficult for them to comply so there's an effort to simplify the compliance," Stewart said.
Stewart and the Director of the Sales and Use Tax Division Joe Walls are members of the newly formed state Streamline Sales Tax Commission. That commission has been charged to figure it out a more efficient way to collect the tax.
They say one recommendation is for a single point of filing for online and in store sales tax. It's now a part of current state legislation officials hope passes.
There is legislation pending in Congress that could give state and local governments the ability to tax online retailers. Local revenue officials say it will be a challenge getting it passed.
The Alabama Department of Revenue has provided the following links for additional information on the use tax:
http://www.revenue.alabama.gov/prdocs/ConsumerUseTax11.pdf
Here is some additional information about how to report the consumer use on your Alabama individual income tax return. These links should take you the Alabama Form 40 individual income tax return instruction booklet and the Alabama Form 40 return. See the notes following each link.
http://www.revenue.alabama.gov/incometax/2011_forms/11f40bk.pdf
See instructions on page 10 of Form 40 tax booklet; worksheet on bottom of page 9.
http://www.revenue.alabama.gov/incometax/2011_forms/11f40blk.pdf
(see line item 19b)
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