City Of Tulsa Says 97 Percent Of People Ignore 'Use Tax'

Wednesday, December 18th 2013, 7:22 pm
By: Emory Bryan

One of the big motivations for shopping online is because people think there's no tax. There is a tax, but almost always, no one pays it.

It's called the use tax, but it's the same thing as sales tax and people are supposed to pay it after they buy something online from out of state.

If you buy something from Amazon, Amazon doesn't collect the tax, but you're still supposed to pay it.

It's the busiest time of year for delivery drivers as they unload everything that people have ordered online.

For much of it -- from the big websites like Amazon, Ebay and Overstock -- the price didn't include tax.

But that doesn't mean the item is tax-free.

"A lot of people believe that on the Internet taxes are free, but in reality, there are taxes still required to be paid on those purchases," said Breck Buchanan with the City of Tulsa's Finance Department.

The City of Tulsa relies on sales tax -- and the use tax -- to run the basics of government like the police and fire departments.

When tax goes unpaid, those city services are less than what they could be.

"For the city of Tulsa, it could be close to $10 million a year we're missing out on."

There's a definite trend toward more and more online purchases, but with no federal law to force websites to collect the tax, cities can only encourage people to pay it.

It's essentially on the honor system, but 97 percent of people ignore it.

The state tax forms explain how to calculate the tax, or estimate it if a taxpayer doesn't remember what they bought online.

For a $50,000 gross income, the estimate is $28 in use tax.

It's entered on line 20 of the tax forms.

The rate is the same as sales tax, it's just collected in a different way.

For a city with a tight budget, it's becoming more of an issue.

"The retailer may not be required to collect sales tax on that, but we are required by law to still pay that," Buchanan said.

The city is hoping people will be honest and comply with the law, which would also help the city budget.