Tax fairness

The sales tax that isn’t being collected on the sale of Kansas State University merchandise is only a small part of a much larger issue.

September 4, 2011


The issues surrounding the tax-free online sale of Kansas State University merchandise stretch far beyond purple T-shirts.

It recently has come to light that the “K-State Official Online Store” is using a Florida-based shop to process and ship its online orders. Because that shop isn’t located in Kansas, no sales tax is collected on the purchases. Whether the practice falls within the letter of the law is debatable. Online retailers aren’t required to collect Kansas sales taxes if they have no brick-and-mortar presence in the state. The question then becomes: Is the “official” K-State store based in Manhattan or is it based in Florida?

A number of people, including some state legislators, think the common sense answer is that K-State is selling the merchandise and should collect the proper sales taxes. The situation is exacerbated by the fact that K-State receives significant support from state tax dollars and it just doesn’t seem right for the school to take advantage of any sales tax loophole even if it falls within the letter of the law.

There is, however, a much broader issue to consider. State Sen. Robert Reitz, R-Manhattan, told the Journal-World it wasn’t right for a state entity not to collect sales tax while Kansas-based retailers selling the same merchandise are required to collect the tax. “I think what is good for the goose is good for the gander,” he said.

That’s true, and, as we noted above, it applies to a lot more than Wildcat T-shirts.

Online shopping provides serious competition for traditional retail stores. It is convenient and allows people to shop around easily for the best price on about any item. It’s common practice for shoppers to examine a product in a local store then go home to see if they can find the same product at a lower price online.

Requiring online retailers to collect state sales taxes may not stop that practice but it is at least a step toward leveling the playing field — not to mention the additional sales tax revenue that would flow into state and local government coffers.

Kansas legislators can work to clean up the state law on online tax collections, but the issue may be better dealt with at the federal level. In July, the Main Street Fairness Act was introduced in the U.S. Senate. Its supporters say the measure is designed to simplify and modernize sales tax collections to make it easier for online retailers. It seems that computerized accounting systems would make such collections, if not simple, at least eminently doable.

Brick-and-mortar retailers across Kansas have to collect and remit those sales taxes. It’s only fair that the online retailers that compete against them should have to do the same.


Liberty275 6 years, 6 months ago

Tax internet sales and watch all the servers, money and admin jobs end up in Belize. Meh, they need money worse than we do anyway.

Gedanken 6 years, 6 months ago

Why hasn't any asked why K-State athletics is using a Florida based company anyway? Surely - there is a company in Kansas that is just as good!

tbaker 6 years, 6 months ago

Collecting taxes for on-line sales will drive people away from Kansas on-line retailers. It's simple economics. If you can buy it for less somewhere else, people will. How about we reduce the size of government so we don't need the sales tax this would generate? I wonder how much would be lost in KS income taxes by the effect this sales tax would have on on-line KS business? Cut off the nose to spite the face?

Richard Heckler 6 years, 6 months ago

Bring on the online sales taxes I say.

Perhaps it can reduce our local user fees somehow. How many ways can online sales taxes reduce our cost of living? After all user pays.

It's all about community.

Liberty275 6 years, 6 months ago

Do you know how long it takes to move an internet business? Zero seconds. You fly clone computers off shore, park them in a server room and change your DNS records. In the meantime you ship your products from sales in the states them pull the plug and go live like Bill Gates in the tropics.

There is some cleaning up to do like merging the databases and slaving one system far away in case of fire or tsunami.

Richard Heckler 6 years, 6 months ago

Let's direct ALL online sales tax revenue to public school funding..... written in concrete reinforced with 1" super rebar. Gotta keep the RINO criminals from breaking into the banks somehow. Now we're talkin.

Flap Doodle 6 years, 6 months ago

merrill, you're off to the left of Lenin. What makes you a qualified judge of who is a real Republican and who is a Republican In Name Only?

Keith 6 years, 6 months ago

Why, he possesses the very same qualifications for name calling that you have.

voevoda 6 years, 6 months ago

snap_pop_no_crackle, You have just proven that you have no clue what Lenin wrote. Otherwise, you'd realize that merrill's comment has no relationship whatsoever to any position that Lenin took.
Ascribing "Communist" views to political opponents merely as a term of abuse went out in 1991, with the collapse of the Soviet Union.

Robert Marble 6 years, 6 months ago

it must be crappy living in a state with sales tax

oldvet 6 years, 6 months ago

The sales tax issue is determined by where you are incorporated and where your business entity is located. If you are incorporated in the state of Kansas, then you are required to have a Kansas sales tax ID and to collect sales tax on purchases that will be shipped to Kansas addresses, regardless of where your supplier/shipper is located. You will also be paying income tax to the state of Kansas based on the income of this business, regardless of where the sales get shipped. If you incorporate in a state that has no sales tax or income tax (e.g. Alaska) and your business entity is located there, then you collect no sales taxes regardless of where you ship to or from. And maybe you pay no state income taxes on your business income. If KSU has outsourced the business to an out-of-state entity, and collects only royalties on the logo, then they probably have no responsibility to collect sales taxes for items shipped into the state.

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