On tax forms, Arizonans must report out-of-state purchases

Peter O'Dowd Mar 16, 2012

Jeremy Hobson: Let the countdown begin. Tax day is now less than a month away. And in Arizona, a new line on the state’s tax return asks people how much shopping they’ve done out of state — think online shopping.

Peter O’Dowd reports now from Phoenix.

Peter O’Dowd: Every tax season is different. But this year, Line 30 of Arizona’s tax form has caught people like Linda Young off guard.

Linda Young: It was a surprise to me, so I’m sure it would be a surprise to a lot of people.

Young is a veteran tax preparer. She says she didn’t notice the reporting requirement until I asked her about it.

Young: How many people are committed enough to keep track of catalog purchases and whether they paid taxes on them or not? I don’t think realistic at all.

Realistic or not, it is the law. In fact, it has been for more than 50 years. But 2012 is the first year it’s showed up on tax forms. Across the state, tax preparers say their clients have had to either go back and search their credit card receipts, or simply guess how much they’ve spent. The state is asking shoppers to voluntarily pay less than 7 percent on their purchases out of state.

Matt Heinz is a Democratic lawmaker, who says making a good-faith effort to comply helps the little guy.

Matt Heinz: It’s on the honor system, basically, to help even the playing field for those mom and pop small businesses — the brick and mortar businesses — who are trying to compete against larger out-of-state corporations.

Across the country states are looking for different ways to collect sales tax from online retailers. Arizona recently sent Amazon a bill for more than $50 million in uncollected sales tax. And Line 30 on the state tax form is just another way to make up the difference.

But state Rep. Debbie Lesko says it’s not a good solution.

Debbie Lesko: Let’s just get rid of it.

Lesko is a Republican who is sponsoring a new bill that would eliminate Arizona’s use-tax altogether.

Lesko: Because they’re making criminals out of people who don’t even know they should be doing this, and it’s really burdensome.

Lesko says Congress already has a solution, with what’s known as the Marketplace Fairness Act. That bill is pending and would give all states a framework to collect revenue from out-of-state retailers.

In Phoenix, I’m Peter O’Dowd for Marketplace.

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