Do you pay the ‘use’ tax you owe on Internet purchases?

Print

This week I covered an interested topic in the House Taxes Committee regarding sales tax collection on Internet purchases.
Here’s the link to the story that I completed for my day job. 
This is a federal issue, so it may be a while before we’ll be paying sales taxes on Internet purchases. But did you know that for products you purchase over the Internet, you are obligated to pay a “use” tax.
Yup, you may have a tax liability you didn’t even know about. If you purchase more than $750 goods and services by mail order or over the Internet, you should be paying the tax.
It wasn’t too much of an issue in the old days when we only had to deal with the “Monkey-Ward” and Sears catalogs. But now the volume of product purchased over the Internet is causing havoc with our local retailers and contributing to the state’s lower sales tax collections.
As you fill out your state income tax form, you first might be interested in this paragraph from the Minnesota Sales and Use tax instruction book:

If you buy a taxable item for your own use without paying sales tax, you probably owe use tax. The tax rate is the same for both sales and use tax, and the same exemptions apply. Use tax is due on taxable items and services used in Minnesota if no sales tax was paid at the time of purchase. The general use tax rate is the same as the state’s general sales tax rate, 6.875 percent. All general local sales taxes also have a corresponding use tax, which is at the same rate as thelocal sales tax.

Here’s where how to get your form: Go to www.taxes.state.mn.us. And if you’d like even more information on the subject, check out this explanation from nonpartisan House Research. 

I’d be interested in hearing your comments on the issue.