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Archive for Thursday, August 21, 2003

Sales tax law ‘simpler’ than thought

State officials say critics, merchants exaggerated problems

August 21, 2003

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— A Department of Revenue official and several legislators suggested Wednesday that problems blamed on the state's new sales tax law have been exaggerated by critics and fearful merchants.

That law, which took effect July 1, requires merchants to collect state and local sales taxes based on the rates imposed where customers have goods delivered, ending a decadeslong practice of using the rates imposed where a merchant was located. A merchant who delivers furniture from Manhattan to Junction City must collect the tax imposed in Junction City, for example.

The law is designed to position the state for collecting taxes on Internet and catalog sales. But some merchants have suggested they will have to spend thousands of dollars on labor or computer software to track sales to communities. The Legislative Budget Committee is reviewing the law.

During a hearing Wednesday, Richard Cram, the department's director of policy and research, said merchants' criticism of the new law often disappears when they speak with agency officials and learn complying with the law is less complicated than they thought.

"There's been a lot simpler way to pursue this than the retailers have anticipated," Cram told the committee.

The department has promised lax enforcement of the law at least through the end of this year, to give merchants time to adjust. Some legislators, however, have suggested a longer grace period or even repealing the law.

Several committee members, including Senate President Dave Kerr, said they have been told by software designers that upgrading computer systems should be relatively inexpensive for merchants -- often only a few hundred dollars, not the thousands some merchants have said.

"It would appear there are reasonable fixes to most situations," said Kerr, R-Hutchinson.

And the committee's chairman, Rep. Melvin Neufeld, R-Ingalls, suggested some merchants' fears are being whipped up by lenders who want to force those merchants to buy expensive software the lenders have developed.

Cram said: "There's a lot of exaggerated numbers being thrown around."

State officials estimate Kansas could collect between $70 million and $140 million in additional revenues annually from Internet and catalogue sales. Kansas has joined a multistate effort to pursue such tax revenue, but states need the permission of Congress, which regulates interstate commerce.

Still, Cram told the committee seven or eight out-of-state retailers with Internet sites have volunteered to start collecting Kansas taxes. Citing privacy laws, he would not identify the retailers.

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