Legislation Would Require Online-Only Retailers to Charge Sales Tax

OKLAHOMA CITY (January 23, 2011) – Legislation authored by state Rep. Pat Ownbey would level the playing field between “brick and mortar” businesses and online-only companies.

House Bill 2586 updates Oklahoma statute to define what constitutes a “physical presence” to ensure the definition includes businesses that are based in the state, but do not have a physical storefront.

“The Supreme Court has ruled that businesses who have a physical presence in the state are required to charge sales tax,” Ownbey, R-Ardmore, said. “My legislation clarifies what that physical presence means so that companies understand what they owe and cities and towns receive the sales tax they are due.”

Online-only retailers should be commended when they cut out costs and overhead, but should not be allowed a tax advantage,” Ownbey said.

“Brick and mortar retail businesses that have e-commerce sites are required to collect sales tax online at the point of purchase,” Ownbey said. “Meanwhile, online-only retailers with a presence in the state are not required to collect sales taxes. This creates an unfair advantage of one business over another in our law. This legislation would help level the playing field so that all businesses charge the same tax for the same product purchased by the same consumer.

“If an online-only retailer can beat other Oklahoma retailers on price because they’ve figured out a way to cut out supply chain costs, cut overhead and reduce labor or other costs – that’s fine, it’s the American way. But competition requires a level playing field and current law is putting its thumb on the scale in favor of online-only retailers and that only hurts Oklahoma’s top job creators – small businesses.”