LANSING – Continuing efforts to get Internet and catalog sales companies to collect individual sales taxes will be a major topic of discussion at next week’s National Conference of State Legislatures meeting in Seattle, and a recent report from the Department of Treasury estimates that unpaid sales taxes through offsite sales cost the state $246 million in fiscal 2003-04.

For the current fiscal year the report estimates the state could lose $270 million in sales tax revenues to items purchased online or through catalogs.

By fiscal year 2007, which loss could grow to $328 million unless a new voluntary collection program slated to begin October 1 in 18 states helps trim that amount.

But the figure has grown since 2001, when catalog and Internet sales cost the state and estimated $194 million.

From state fiscal officials’ standpoint the loss wasn’t as great as officials worried about in the late 1990s, in part because the recession of 2000-01 slowed the growth of Internet commerce.

Last month, Michigan officials along with officials in 17 other states announced they would begin voluntary compliance under the streamlined sales and use tax agreement on October 1. On that date, catalog and Internet retailers will be encouraged to collect and remit sales taxes to individual states and local governments.

Unless Congress acts, however, the states cannot compel retailers to collect those taxes. The topic will be the subject of a daylong meeting on August 15 during the annual NCSL meeting.

The figures on losses to the state come from the annual report on the state’s sales tax, which was issued in late June.

While the growth of the Internet has sparked the much of the concern about offsite sales, the report said the bulk of the $246 million in lost sales taxes in 2004 were in sales to traditional catalog operations.

But potential revenue losses from electronic sales are expected to grow from $80 million in 2004 to $140 million in 2007.

Since 1999, the state has added a line on its personal income tax forms, the M-1040, stating that individuals should pay use taxes on items they have purchased online or by catalog. For 2004, slightly more than 81,000 taxpayers paid the state $3.4 million in use taxes on those purchases.

This story was provided by Gongwer News Service. To subscribe, click on Gongwer.Com