INDIANAPOLIS (WISH) - I-Team 8’s investigation into serious questions about how some retailers are calculating state sales tax at the register is already raising eyebrows from a key Indiana lawmaker.
I-Team 8 found numerous cases of confusion at the checkout. Our investigation found retailers across Central Indiana having a tough time telling which products to charge 7 percent sales tax on, and which products should be tax free.
Many of those retailers called the list of tax free items confusing, and said they have a hard time determining whether a product should be tax free when a similar product on the shelf next to it is deemed taxable.
I-Team 8 took their concerns to Senator Luke Kenley (R-Noblesville), one of Indiana’s three delegates on the Streamlined Sales Tax Governing Board. Indiana joined the streamlined sales tax system in 2005, and Kenley says the state has reaped economic benefits ever since.
“As [online sales] become a larger part of the economy, it's become a problem between your brick and mortar retailers and your internet retailers where you have a government imposed price disadvantage for your bricks and mortar retailers. So, we needed to get a more unified system overall. This system makes it easier for remote and online retailers to collect on sales taxes that are owed on purchases that are online. That levels the playing field,” he said.
Kenley admits a system that—for example—charges sales tax on some candy bars but not others--may seem convoluted to some. But, he says the decisions on products weren’t arrived at lightly.
“That was the result of actually years of very boring discussions about what should and shouldn't be taxable. And, the retailers were all present. It's just hammered out in that way. At some point, you have to make a decision so people know what is and what isn't. It's pretty clearly identified. The logic may escape some people, but it was based on a joint decision of what fit the category and what didn't,” he said.
And, like those decisions or not, Kenley says that list is the law and it's up to retailers to follow it.
"There's been a lot of effort to make it be simple and uniform, so the retailer knows what's taxable and what's not. And, we work with the business people in trying to reach those solutions. So, it's really at this point more a question of looking at the map than it is creating the map,” Kenley said.
I-Team 8 also discovered that much of the sales tax revenue charged by stores in error on tax free products is likely going into state coffers.
Kenley called that disappointing, but not intentional.
“The state's not interested in collecting any tax that might be considered beyond what was necessary to be collected,” he said. “So, hopefully that gets clarified and simplified and handled in ways that are particularly for the consumer's benefit.”
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