Oklahoma City blames online sales for millions in lost revenue

Online shopping (FILE).

Oklahoma City’s finance director estimates uncollected tax from online sales cost the city $10 to $15 million a year in lost revenue.

“The younger generation, really it’s just the way they do business,” said Craig Freeman, finance director for Oklahoma City. “So what you see going forward is not just what we’re losing today, but what we could be losing in the future.”

Freeman says Oklahoma City relies on sales tax to cover day-to-day operating expenses for things like street maintenance, police and fire protection, and parks and rec.

“So when we see something that impacts sales tax, that equates to affecting services and our ability to deliver services to our citizens,” Freeman said. “About 62 percent of our budget in the general fund comes from sales and use tax.”

But the city doesn’t get the sales tax from online retailers that don’t have a physical presence in Oklahoma. It stems from a 1992 Supreme Court ruling that prohibits states from requiring out-of-state vendors to collect sales tax on the state’s behalf.

Current state law does require residents to keep track of purchases from out-of-state retailers, and then calculate the sales tax themselves on their state return each year. However, experts say the vast majority of people in Oklahoma don’t do that.

Some online retailers, like Amazon, chose to voluntarily remit sales tax to Oklahoma, but many others don’t.

“To fix it as a whole, it really has to be a federal solution,” said Freeman.

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