In a significant policy change, the West Virginia Tax Department has issued an administrative notice to most out-of-state retailers, directing that they are to begin collecting and remitting taxes on internet sales to West Virginians.
The order states that “notice is hereby given” to out-of-state retailers that currently are exempt from collecting state and municipal sales taxes because they do not have a physical presence in West Virginia, that they “will be required to collect and remit West Virginia state and municipal sales and use taxes on all sales made on or after January 1, 2019, that are delivered into West Virginia.”
That is a significant departure from Gov. Jim Justice’s statement on June 21 — the day of the U.S. Supreme Court ruling overturning a 1992 court precedent limiting states’ ability to collect sales taxes on many online purchases.
Justice said that, despite the green light from the high court, he did not support what he described then as imposing new taxes on consumers.
“When I took office and our state was struggling financially, at that desperate time, I might have considered supporting legislation to enforce West Virginia sales tax on out-of-state transactions. However, now I do not support adding additional taxes on our people in this manner,” Justice said at the time.
“With our state’s growing economy, I don’t want to reach into West Virginians’ pockets when we don’t need to.”
At the time, Justice’s decision was criticized by the West Virginia Retailers’ Association — President Bridget Lambert said in-state merchants are at an immediate 6 percent price disadvantage with online retailers that don’t collect sales taxes — and by former Delegate John Doyle, D-Jefferson, a former president and longtime member of the national Streamlined Sales Tax Governing Board.
Doyle has said that failing to collect the taxes from the on-line retailers not only leaves $50 million or more a year in uncollected revenue on the table but is unfair to in-state retailers that are required to collect and remit those taxes.
Doyle, who is running for his old House seat this fall, speculated Monday about the Justice administration’s change of heart.
“Maybe he recognized it will get us another $50 [million] to $60 million a year,” Doyle said.
Doyle, a longtime Finance Committee member, said the state will need additional revenue to cover 5 percent pay raises given to state teachers, school service personnel and other government employees this year, along with Justice’s promise for a second across-the-board 5 percent raise in 2019, as well as his promise to contribute $100 million to the Public Employees Insurance Agency to offset future increases in health care costs.
Doyle said that totals nearly $400 million for the 2019-20 budget year.
“Even if you take the rosiest of his economic scenarios, he’s still short of revenue for next year,” Doyle said.
Justice spokesman Butch Antolini could not be reached for comment Monday, a state holiday for Columbus Day.
The Streamlined Sales Tax Project is an ongoing national effort to simplify and create uniformity in administration of sales taxes, in response to claims from e-commerce retailers that myriad sales tax rates and tax exemptions on various goods and services made it too complicated to attempt to collect and remit taxes for multiple jurisdictions.
In the administrative notice, Tax Commissioner Dale Steager notes that West Virginia is a member of the Streamlined Sales Tax Governing Board, and is one of 24 states to adopt the Streamlined Sales Tax Agreement in state law.
Under the notice, out-of-state retailers with no brick-and-mortar locations in West Virginia will be required to collect and remit sales taxes on purchases delivered to West Virginia — with exceptions for retailers that have fewer than 200 transactions or less than $100,000 in total sales in West Virginia annually.