Firms Set To Collect Tax On Internet Sales

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Efforts are moving forward slowly for Nevada to collect sales and use taxes on transactions made over the Internet.

State Taxation Department officials say that just a handful of national firms voluntarily signed up since last November to begin collecting the sales tax on purchases made by Nevadans.

Dino DiCianno, deputy director of the department, said it's illegal for the state to disclose the names of the firms or the amount of sales tax that has been collected and remitted to the state. But he the national firms that have a presence in Nevada are making a"good faith effort"to come into the system.

Federal law prohibits states from requiring companies to collect the sales and use tax on Internet transactions, but 34 states have signed a streamlined sales and use tax agreement that would simplify the collections. Merchants can voluntarily sign up with the states. Nevada signed up last November.

No decision has been made yet whether the companies that voluntarily registered in Nevada will have to pay back taxes, interest or penalties. That will be up to the Nevada Tax Commission.

Estimates vary on how much tax revenue states are losing on Internet sales. Some have complained that the companies are taking business away from local merchants, who are at a disadvantage because they charge the taxes.

Senate Majority Leader Bill Raggio, R-Reno, said during this year's legislative session that one private study showed Nevada lost $151 million in sales tax revenue in 2001 and could lose as much as $444 million in 2006. But he said that study was done by advocates of Internet taxation.

The Legislature passed SB314, introduced by Raggio, to allocate $25,000 to the state Taxation Department for a study to get a better estimate on how much the state might collect in Internet taxes.

The study is expected to be completed in time for the 2005 Legislature.