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Online sales tax revenue eludes Indiana

Did you report those out-of-state purchases on your state income tax returns? If not, you’re not alone. Indiana collects just $3 million from residents voluntarily complying with the requirement, while some reports estimate that $114 million a year goes uncollected.

The Indiana House passed a bill in February to require online retailers to begin collecting state sales taxes July 1, but Senate Appropriations Committee Chairman Luke Kenley blocked the bill because he believed it unfairly targeted, which cut a deal with former Gov. Mitch Daniels to begin collecting the tax in 2014 in exchange for warehouse jobs created here.

Other states, however, have pushed ahead with collections. Kentucky, New York, Pennsylvania and Texas are among those now collecting from Amazon. New York’s highest court upheld the state’s “Amazon tax” last month, even though judges elsewhere have struck down similar laws.

Amazon and other online retailers have complained that the complexity of collecting sales tax for multiple taxing units make it too difficult to do, but the retailer seems to be accommodating some states. Soon, brick-and-mortar stores won’t have to compete with Amazon on an uneven playing field.