At the root of debate about whether Internet retailers and other direct marketers should be required to collect state sales and use taxes is the well worn complaint by state revenue departments that consumers (the folks who actually owe the tax under nearly every state’s laws) just do not self-report and pay use tax if left to their own devices. Consequently, the states’ argument goes, states should be entitled to shift the burdens of tax collection onto remote sellers (no matter how onerous), rather than requiring the state to pursue measures to promote reporting, or to boost collection. There are ways, however, for a state to educate consumers about their obligations to pay the use tax.
For example, now through November 30, taxpayers who have unreported use tax liability due to the State of Maine may remit tax under the 2012 Maine Use Tax Compliance Program. The Program, enacted by the State’s Legislature last spring, seeks to “encourage payment of previously unreported use tax and to improve compliance with the State’s use tax laws.”
The Program covers periods from January 1, 2006 through December 31, 2011. Taxpayers must report all taxable purchases for which tax has not been remitted for the entire six year period. But, taxpayers only must remit tax for the three years with the greatest amount of unreported tax due. No tax is due for the three years with the lowest amount of tax reported and all interest and penalties are waived for the entire six year period. Taxpayers who timely file returns under the Program are “absolved from further liability for unreported and unassessed use tax incurred prior to January 1, 2012, and [are] also absolved from liability for criminal prosecution and civil penalties related to those taxes for those years.”