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Taxing Times
February 13, 2009

While hobbyists are focused on the introduction of the new Lincoln cent with the log cabin on the reverse yesterday and the new Lincoln commemorative silver dollar, less noticed is the work of state legislatures in their efforts to close their budget gaps.

One method is to apply the state sales tax to online transactions.

The formative years of the Internet saw a tax holiday of sorts declared by the federal government. Firms selling products online did not have to collect sales taxes and remit them to the states in which the buyers resided. Long established businesses cried foul because they said it was unfair competition.

The federal government chose to ignore the protests and considered the business tax collecting exemption aspect for Internet sales to be an aid in building out the infrastructure.

This exemption did not apply to individuals. Persons buying things online that are ordinarily subject to sales tax are technically liable for the tax. Obviously, the rate of compliance was not particularly high.

In Wisconsin there is a line on the income tax form where the individual declares what he should have paid in sales tax on out-of-state purchases either online or by mail. This self-declared tax is called the use tax. It applies to coin purchases, bullion coin purchases, etc.

Now Wisconsin is looking to become even more aggressive. It wants to follow the lead of New York and mandate that sales taxes be collecting by out-of-state merchants.

Will this proposal pass into law? It is hard to see how the state legislators can resist the idea. They want more money. Imposing obligations on out-of-state firms has no internal political consequences.

I assume other states are working along these lines as well.

What's happening in your state? Let me know. Post a comment here.

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About the Author
David C. Harper has been a coin collector since 1963. He joined the Krause Publications editorial staff in 1978 and is currently editor of Numismatic News and World Coin News. He also edits two books annually, North American Coins & Prices and Coin Digest. He is the author of the Class of '63 column that runs each week in Numismatic News. His first bylined numismatic article appeared in the June 1971 issue of Coins Magazine and his various Krause Publications assignments included a stint as editor of the magazine 1980-1983. Harper received a bachelor of science degree from the University of Wisconsin-Oshkosh in 1977. He had a double major of journalism and economics.

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