Probe of Catalogue Taxes Sought

Six senators have asked the Federal Trade Commission to investigate whether mail-order and catalogue companies engage in deceptive advertising by implying that no sales taxes apply to goods shipped across state lines.

Even though current law exempts mail-order businesses from collecting sales taxes for jurisdictions where they don’t have a presence, 46 states and the District of Columbia require that a so-called use tax on the purchase be paid to the state where the customer lives. Few people know about this law and few states enforce it.

Sen. Dale Bumpers (D-Ark.) is sponsoring legislation that would require mail-order companies to collect taxes on all sales. Bumpers says consumers are hurt by such advertising practices because they may be required later to pay use taxes on earlier purchases, which would then include interest and penalty charges. He also said the ads give an unfair advantage to interstate sellers. Bumpers’ efforts are supported by the retail store industry but face strong opposition from consumers and the direct-mail industry.