The Chicago White Sox lost the 1919 World Series to the Cincinnati Reds. “Shoeless” Joe Jackson and seven other White Sox players were accused of accepting money to throw the Series. A Chicago street urchin came up to the outfielder, grabbed his coat sleeve, and asked Shoeless Joe, “It ain’t true, is it, Joe!” So in a similar fashion, could one of our Mere Comments readers be a tax evader? Say it isn’t true, Mike!
How could such a situation arise? First, let me put some perspective on this. The fetching Mrs. Avramovich and I have never purchased anything from online Internet retailers for a variety of reasons. Nope, as hard to believe, not from Amazon, not Netflix, not from Macy’s, Wal-Mart, never, zilch, nada! Nor do we intend to do so as long as humanly possible. So, I have no personal or vested interest for or against Internet purchases. So, I can objectively opine on this topic. However, I can easily imagine that some of my readers have made Internet purchases from an out-of-state business. In this context, by a 2-1 bipartisan majority, the U.S. Senate recently passed the so-called “Marketplace Fairness Act,” which allows states, counties, towns, Indian reservations (yep, the Native American reservations were snuck into the bill by the Senate leader Harry Reid (D-Nevada) at the last moment) to levy and collect sales taxes on Internet purchases. This bill is intended to overturn the 1992 Supreme Court Quill decision that found that out-of-state retailers are not required to collect sales taxes, unless they have a “nexus,” meaning a sufficient business presence in a particular state, such as an office or warehouse. If enacted, Internet sellers would have to comply with the sales taxes for almost 10,000 different jurisdictions within the United States that collect sales taxes, and where the same product may be taxed differently in various jurisdictions. (An Internet seller of popcorn, for example, could face a bewildering task as some towns or counties might classify popcorn a food exempt from, or pay a lower rate of, sales tax, but an adjoining town might fully tax popcorn as a novelty item.) President Obama is enthusiastic about this new tax, and supports it. Although I am unsure whether this bill will pass the House of Representatives, which tends to be more skeptical about raising taxes on consumers, and still maintains, for the time being, some modicum of fidelity to federalism principles. But then again, access to tax money talks, and I am sure even some Republicans can be bought as their states can use the tax money. Nevertheless, I am unsure that the Supreme Court would find this end run around its Quill ruling to be sufficiently constitutional under our federal system. Moreover, given that the Senate bill applies only to businesses that sell more than $1 million of goods annually, there is also a potential constitutional equal protection legal argument. But whether this Senate bill is ever enacted into law, most Internet purchasers already have a tax liability due to their states, and other local jurisdictions.
So, where is the possible tax evasion? Well, let us consider the example of Illinois, although dozens of other states have similar provisions. According to the Illinois Department of Revenue website:
In 1955, the General Assembly passed the Use Tax Act. Use Tax is a sales tax that you, as the purchaser, owe on items that you buy for use in Illinois. If the seller does not collect at least 6.25 percent sales tax, you must pay the difference to the Illinois Department of Revenue. The most common purchases on which the seller does not collect Illinois Use Tax are those made via the internet, from a mail order catalog, or made when traveling outside Illinois. You must keep your receipts when you make these types of purchases. In 2010, the [Illinois] General Assembly passed a law making it easier for individuals to pay their Use Tax by putting a line on Form IL-1040. It also created an Illinois Use Tax Amnesty which means individuals can pay Use Tax owed for prior years without penalty and interest on Form ST-44.
Illinoisans might easily contend, “Oh Balderdash! That is a ridiculous tax!” But do not be sanguine about this. The Illinois Department of Revenue warns:
The Illinois Department of Revenue can assess use tax owed by taxpayers who do not pay voluntarily. For taxpayers who do not have records to document their use tax liability, the department will estimate liability.
Of course, Christian believers are reminded by our Lord, “Give to Caesar what is Caesar’s, and to God what is God’s.” And St. Paul teaches, in pertinent part in Romans 13: 6-7, “This is also why you pay taxes, for the authorities are God’s servants, who give their full time to governing. Give everyone what you owe him: If you owe taxes, pay taxes; if revenue, then revenue . . . “ So could there be a possible tax evader among my readers? Well, if you ever were an evader or know of one in your household, then you are now responsible for this information, which has been presented on Mere Comments as a public service to our readers. After all, such sales and use taxes are needed by cities, counties and states to pay for public education, safety and police, and health care for the poor. Surely, no one, particularly Christian believers, can reasonably object to paying these taxes.