SC Loses Tax Revenue on 2009 Internet Sales

Despite the good news of Boeing coming to save South Carolina during one of the worst economic times in history, the numbers are not looking good for online sales.

At a time of massive state budget cuts, South Carolina lost $94 million last year in uncollected Internet sales taxes, according to a study by the University of Tennessee. This year, the state is expected to lose $110 million, according to the study.

The state Department of Revenue says the main problem is a lack of education among taxpayers. Most taxpayers don’t realize that, if a website doesn’t collect sales tax on a purchase, they’re supposed to keep track of it and pay the tax themselves. Part of the confusion may come from the fact that it’s called a “use tax” on state income tax returns.

The Department of Revenue says it has agreements with 18 of the 25 largest companies that do Internet business in the state and those sites do collect the tax. As for enforcement, the department says it does enforce collections but won’t go into detail about how.

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