If you are one of the 115,700 people who voluntarily paid the 6 percent use tax to the state of Pennsylvania, you are part of a small, honest group of people.
This tax season marks Pennsylvania's second year of conspicuously reminding taxpayers that they are, and always have been, required to report the year's worth of untaxed purchases on the Internet, through catalogs, during travel or through 1-800 numbers, on their state income tax so they can remit the 6 percent to the state.
Last year, the 2011 Pennsylvania Personal Income Tax Return included a new line 25 to allow individuals to self-report the amount of sales tax on purchases made online or via catalog from out-of-state firms that don't charge state sales tax.
The state is also putting pressure on retailers. In the fall, the state began enforcing a requirement that all of out-of-state based retailers with a physical presence or a broadly defined "nexus" of operations in Pennsylvania begin levying the tax on goods sold to state residents. The state raised $3.36 million in October, $3.19 million in November and $6.07 million in December, according to the state Department of Revenue.
Department of Revenue spokeswoman Mia Warren said the agency has simplified the reporting of the tax and worked to let taxpayers and professional tax preparers know of their responsibility to report the use tax. If someone is found not reporting the use tax, or any other tax, they could be assessed the taxes due, plus penalty and interest, she noted.
The state is unlikely to have any great success asking tax filers to compile, tabulate and disclose a year's worth of online and cataloged purchases.
Yet, Paul Cobb, tax preparer with Mikey's Tax Service in Scranton, said taxpayers who knowingly dodge the use tax do so at their own risk.
"When you file you taxes on paper or use a program, you are asked about the use tax and have to check a box," he said. "It's difficult for a taxpayer or a tax preparer to claim they didn't know about it."
John E. McGovern, a certified public accountant and attorney in Scranton said he still gets phone calls from clients, mostly businesses, who don't know what the use tax is.
"The average person doesn't know what it is or what their responsibility is," he said.
Even those individual who are aware of it are likely to assess the risk and think it's OK to skip that line.
"Human nature would be to say, 'The state doesn't know what I bought, and they aren't going to come after me for $4,' " Mr. McGovern said. "I'm surprised the state gets as many individuals as it does to report a use tax."
Businesses are more likely to claim it because they have more at stake. They are more likely to face an audit, for example.
Why do some Internet, catalog, and 1-800 retailers - collectively known as "remote" retailers - not charge tax?
The U.S. Supreme Court has held in several decisions that states may not require remote retailers to collect a tax unless they have a physical presence in that state. A state or locality can require individuals or businesses in their jurisdiction to pay the tax.
Since the early days of the nation, taxation has been based on geographic lines because commerce used to be local, said Joseph Henchman, vice president for state projects for the non-partisan Tax Foundation.
Mobility, the mail and the Internet means that commerce has not been local for a long time, Mr. Henchman said.
Pennsylvania's efforts and a 24-state compact that jointly levies sales tax on retailers who volunteer to participate, the Steamlined Sales and Use Tax Agreement are attempts to deal with that not-so-new reality.
SSUTA, as it is called, makes it easier for remote retailers to collect the tax by establishing rate and boundary tables by ZIP code and tables that show what is taxable in a given jurisdiction, said Craig Johnson, executive director Streamlined Sales Tax Governing Board.
Pennsylvania does not participate in SSUTA. The group is prohibited from disclosing the 1,828 retailers who voluntarily participate.
Mr. Henchman said Pennsylvania's moves that the SSUTA consortium are piecemeal efforts and that the permanent solution lies with the U.S. Congress.
"This comes down to compelling Congress to do what it needs to do," Mr. Henchman said.
Contact the writer: dfalchek@timesshamrock.com