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Some Counties Missing Out on Tax Benefits from Online Shopping

Calhoun County, S.C., says that the taxes from online purchases are being collected by neighboring counties due to incorrect ZIP code information. “I think we need to get every nickel we can get.”

(TNS) — Calhoun County, S.C., officials are worried other counties may be getting some of its sales tax money.

Council approved a resolution Monday requesting legal assistance from the S.C. Association of Counties.

“I think we need to get every nickel we can get,” Calhoun County Council Chairman David Summers said.

County officials claim taxes from online purchases made in Calhoun County are being collected by bordering counties, such as Lexington and Orangeburg, due to incorrect zip code information.

“This particular issue came about, I believe it was a gentleman in town who was remitting his sales tax form and noticed that the location for the (S.C. Department of Revenue) distribution was an Orangeburg County location,” attorney Lawrence Flynn of Pope Flynn Group said.

Geolocation software can prevent such problems, Flynn said.

But online retailers without geolocation software can send sales taxes to the county associated with a buyer’s zip code.

Flynn noted that the issue exists with many smaller online retailers.

“This is not, say, an Amazon issue who does geolocate the actual point of sale of a particular transaction, but there are other online retailers that are required to remit sales taxes that are not actually going through the geolocate process,” Flynn said.

“The hope would be that DOR would pass a regulation or pass some requirement to make online retailers update to geolocation software,” Flynn said.

Calhoun County Administrator Ted Felder stated that the county has five areas with zip codes associated with other counties.

“As a result of that, you could be missing out on some collections of both your capital projects and your local option sales tax,” Flynn stated.

Flynn said there is no direct way to quantify how much the county has lost. He believes the problem will only become worse as the number of online retailers increases.

County officials are hoping that a letter will notify DOR that the issue has a direct effect on its tax collection.

“The hope is the director of DOR would take this and appreciate the fact that in a small county, every dollar that could otherwise be generated and raised is beneficial, and it largely is going to affect the smaller counties,” Flynn said.

©2020 The Times and Democrat (Orangeburg, S.C.). Distributed by Tribune Content Agency, LLC.

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