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Resolution from Little Rock board urges Legislature to act on online sales tax

By Chelsea Boozer

This article was published April 19, 2017 at 4:30 a.m.

Little Rock's elected officials continued their push to get state lawmakers to approve measures that would allow for online sales tax collection by passing a resolution Tuesday night.

The city Board of Directors voted 7-0 to ask Gov. Asa Hutchinson to put the sales tax issue on the agenda of a planned special session next month. The governor sets the special session agenda.

City Director Erma Hendrix voted "present' on the measure, and Directors Ken Richardson and B.J. Wyrick were absent. All other city directors voted in favor.

The resolution is also addressed to the Arkansas General Assembly, asking it to pass laws that require online retailers to either collect local sales and use taxes, or to give up the names of their Arkansas customers so the state and localities could then collect the taxes.

Such laws were considered by the House and Senate this session. House Bill 1388 was approved by the House and made it out of a Senate committee, but didn't come up for a vote in the full Senate before the Legislature recessed. It would have required retailers to provide customer information.

That bill was overshadowed by Senate Bill 140 that would have required larger online retailers to collect sales taxes and remit them to the state.

While SB140 generally had support from lawmakers -- it was approved by the Senate but not the House -- arguments over how the new state revenue would have been spent kept the measure from being approved.

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Little Rock board members -- led by City Director at large Dean Kumpuris -- said state legislators need to find something else to "play politics" with, and not hinder a bill that would positively impact every city in the state.

Little Rock City Attorney Tom Carpenter estimates that the city loses about $10.5 million per year in uncollected online sales taxes.

That number is based on the city's current sales-tax collections and a U.S. Census Bureau report from February that noted more than 8 percent of all sales are made on the Internet. Carpenter said he is looking into his calculation to get a more accurate estimate.

Sales taxes are already due on online purchases. Customers are supposed to turn in a form on their purchases at the end of the year and pay any city, county and state sales taxes due on those items. But that rarely happens, and without knowing who buys from where, the state can't enforce the collection.

Tuesday's resolution was sponsored by Kumpuris and City Director Lance Hines.

Hines said that if the state would put the laws in place, the Little Rock could then sue retailers to collect the tax and retry a decades-old court case that established the case law that says only retailers with a physical store presence in a state have to collect sales taxes on purchases made in that state.

One outcome of the debate in the Legislature on collecting taxes on online sales was that online retailer voluntarily agreed to collect and remit sales taxes from its Arkansas customers, beginning March 1.

Metro on 04/19/2017

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Preston says... April 19, 2017 at 8:26 a.m.

The city should be putting their efforts on solving the crime and killings that are plaguing the entire city instead of this focus of squeezing all they possibility can from their citizens. Sales taxes hurt the seniors and poor harder as it is one of the most regressive tax imposed, even including online sales. It sometimes appears the board has just given up in sections of the city and place little behind efforts in other parts to allow us to live our lives with any hope that we are safe.

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