Wagnon predicts survival of sales tax law

Revenue secretary prepares Lawrence businesses for change

Attempts to repeal controversial changes to the state’s sales tax law likely will fall flat, the state’s revenue secretary said Tuesday in Lawrence.

Kansas Department of Revenue Secretary Joan Wagnon told about 20 business owners and managers gathered for a workshop at the Dole Institute of Politics that they should get used to the idea of charging sales taxes based on where they deliver products rather than where their stores are located.

“The train is coming through the station,” Wagnon said. “This is the direction that tax policy is going in this country.”

Kansas is part of a consortium of 38 states that is changing sales tax laws in an effort to win congressional approval to begin taxing sales made by out-of-state Internet companies. But since the law took effect July 1, Kansas retailers who make a large numbers of deliveries or mail-order sales complained the new rules were an administrative nightmare.

State officials responded by declaring a “relaxed enforcement” period. During this period, which Wagnon expects to continue through July 1, businesses who make a good-faith effort to correctly file their returns won’t be penalized if mistakes are made.

Wagnon said there would be efforts in the Kansas Legislature to repeal the tax changes. She said she had been told by legislative leaders that the House Taxation Committee would begin debating a bill next week that would repeal the law.

“I suspect it will come up for a vote on the floor of the House, and I don’t know what the outcome there will be,” Wagnon said. “But when it reaches the Senate, I think it will get a chilly reception.”

Wagnon said she had spoken with key Senate leaders who supported keeping the law intact. She also said Gov. Kathleen Sebelius had no desire to repeal the law.

The Lawrence workshop was one of 10 that Wagnon has scheduled this week to explain new tools her department had created to make figuring sales taxes easier.

Among the highlights:

  • A $500,000 database program that allows retailers to find a specific sales tax rate by entering a customer’s address. The site can be accessed at www.ksrevenue.org.
  • A system that allows businesses to file their sales tax forms online. The system can be accessed at www.webtax.org.
  • A book that lists the different sales tax jurisdiction codes in the state. Revenue officials consolidated several codes, meaning the book now lists 301 different tax rates instead of the 752 that previously were listed. Businesses can request to have a book sent to them by calling (877) 526-7738.

Business managers who attended the meeting said they were still apprehensive about the requirements.

“This has been a real headache for us so far,” said Kim Connon, a manager at the Lawrence Rent-to-Own Center. “This will make it a little easier, but not much. We were really hoping it would be repealed.”

Bill Reynolds, of Owens Flower Shop in Lawrence and Broers Flower Shop in Eudora, said the process still seemed time-consuming and would be costly to businesses.

“If our profits go down, that hurts the state because it causes the state’s income tax collections to go down,” Reynolds said.

Wagnon said she was committed to the sales tax changes because a study had shown the state loses about $70 million a year through untaxed Internet sales.

She said 600 Internet companies, including Amazon.com, have agreed to begin paying sales taxes, which was expected to produce about $6 million a year.