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Cyber Monday sales bumped up state sales tax collections, but not as much as expected

Amazon packages on doorstep
Record-setting Cyber Monday sales means more porches across the United States will look like this. But the remote sales' boost to state tax coffers wasn't as big as some expected.

$9.4 billion. That's how much U.S. shoppers spent on the just-passed Cyber Monday.

That was nearly 20 percent more than last year's $7.9 billion tally for the annual and over-hyped Monday-after-Thanksgiving online shopping day.

Obviously, the $9.4 billion in sales is a Cyber Monday record.

Also obviously, all those online transactions will help out the state treasuries that now, in the wake of the Supreme Court's Wayfair 2018 decision, are getting new sales tax money.

But a not-so-obvious result is that the expected tax boost from these remote sales to state coffers might not be that big.

Already raking in remote taxes: The reason for the seemingly low Cyber Monday sales tax collections has to do with compliance, but not like you might think.

Although the Wayfair ruling made tax collection on remote sales official in 2018, many major online retailers had already been collecting and remitting sales taxes for years, notes Elaine S. Povich in her article for Stateline, an initiative of The Pew Charitable Trusts.

"Many states underestimated just how much of the online market they were already capturing, leading to missed revenue targets for their remote sales tax systems," Jared Walczak, director of state tax policy at the Tax Foundation, told Stateline.

Even before this year's record Cyber Monday shopping spree, data from the National Association of State Budget Officers (NASBO) shows that state sales taxes were growing in most states in fiscal 2019, writes Povich.

That increase is attributed in part to the growth to expanded online sales tax collections. Forty-three of the 45 states with sales taxes now require remote sellers to collect and remit sales taxes. The two that still haven't set up a Wayfair-allowed remote sales tax system are Florida and Missouri.

Marketplace taxes lagging: The one area where remote sales tax collection is lagging is among online marketplace facilitators. These are platforms such as Amazon Marketplace, eBay or Etsy that are linked to the bigger online companies, but where sales tax collections are, shall we say, overlooked.

"Imposing the obligation on those facilitating the transaction allows states to reach sales that are otherwise difficult, if not impossible, to capture," Walczak said.

That tax system hurdle is one reason why 12 states aren't collecting online marketplace sales taxes this holiday shopping season.

Did you shop on Cyber Monday? If so, did your orders include sales taxes for the first time? Or have you been paying that tax on your earlier, non-holiday online purchases?

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