Web tax nets sparse results

TALLAHASSEE — Florida's first aggressive attempt to collect sales taxes on Internet purchases is off to a modest start, with regulators-turned-Web-cops raking in $44,897 in the last four months.
The experiment started July 1, when Florida's new $1-a-pack tax on cigarettes went into effect.
Advocates sold the tax increase as a way to discourage smoking and deal with a budget crisis at the same time, and it appears to be working. In the past four months, sales have dropped 27 percent and the state expects to reap an $887 million windfall this year for Medicaid.
Bill sponsors added a provision that orders the Department of Business and Professional Regulation to go after Internet tobacco sales after critics warned that tax cheats would stream to the Internet.
So far, regulators have relied on tips, mostly from retailers suspicious of competitors, said department spokeswoman Alexis Antonacci Lambert. The department is revving up a public relations campaign and plans to launch a Web site soon, she said.
Agents conducted 28 audits in Jacksonville, Tampa, Orlando and Margate. Another 16 audits will be completed by January. Those are projected to bring in another $19,800 in unpaid taxes, Lambert said.
"We are monitoring the results of the retail audits and the interest in the public relations campaign in order to determine the prevalence of online tobacco sales," Lambert said. "If we find the results indicate substantial noncompliance, we will take the appropriate measures to gain the experience and the resources we need to combat the problem."
The department hired six auditors and a "revenue specialist" on a temporary basis to deal with the new workload. The new hires are still being trained and their combined salaries add up to slightly less than $300,000, according to department figures.
Randy Miller, vice president of the Florida Retail Federation, is underwhelmed by the collection results so far.
"That's less than what they're paying the new people to collect the taxes," he said.The federation has complained for years that catalog and Internet competitors from out of state who don't pay state sales taxes have an unfair advantage over Florida brick-and-mortar businesses.Last year, when he sat on the Taxation and Budget Reform Commission, Miller sponsored a "streamlined" sales tax proposal that sought to standardize Florida's sales taxes with other states and set up a more-reliable sales-tax-collection system for Internet purchases.
Estimates are shaky at best, but some studies suggest Florida could be losing $1 billion a year in unpaid taxes from Internet sales.
Miller withdrew the amendment before it reached the ballot, saying he was afraid opponents would label it a tax on Internet access. Any action will likely have to come from Congress, Miller said. Other attempts have been shot down by the U.S. Supreme Court as violations of the U.S. Constitution's interstate commerce clause.
Jim Smith, executive director of the Florida Petroleum Marketers & Convenience Store Association, the chief critic of the new tobacco tax, doesn't expect state regulators to have much luck tracking down Internet tobacco sales.
"Actually, they're doing a lot better than I thought they would," he said.