A study released by master’s degree students at the Truman School of Public Policy found the state of Missouri loses about $468 million in Internet sales tax revenue annually.

Using data from 2009 U.S. Census Bureau studies, three master’s degree students also estimated in the study “Internet Sales and Use Tax Issues in Missouri” the state stands to lose $1.4 billion in uncollected Internet sales tax revenue from 2011 to 2014.

The data mirrors revenue loss in states nationwide, said Andrew Wesemann, one of the MU graduate students who conducted the study.

“I would have to say, going into the study, I didn’t know what to expect,” Wesemann said. “We did expect it (revenue loss) to be substantial.”

To counteract this problem, the researchers and Dr. David Valentine, the research associate professor who helped with the final parts of the study, have made note of two potential means of legislative action.

At the state level, the Streamlined Sales and Use Tax Agreement helps 24 member states collect taxes from Internet businesses who participate voluntarily. Missouri does not participate but could receive more than $30 million annually if they joined, by Valentine’s estimates.

Only businesses that are physically located in a state can be taxed involuntarily, federal law and U.S. Supreme Court rulings state.

“All this derives from federal law, and that’s one of the complications,” Valentine said. “You can’t just say if you go out-of-state the seller has to collect (taxes).”

The biggest challenge is not having legal authority at the state level to enforce Internet sales tax, professor Tom Johnson said.

“Sales tax (is) designed to collect revenue at the point of sale,” he said. “When sales are outside of the state, states have no jurisdiction.”

The Marketplace Fairness Act, a piece of federal legislation cosponsored by Sen. Roy Blunt, R-Mo., could help states gain more long-lasting power to collect Internet sales tax, Valentine said.

“It sets a national standard for what that tax would be,” Valentine said. “Every seller would know, ‘If I sell something in the state of Missouri, I charge X in sales tax.’”

If national legislation does not pass, which Valentine said he foresees, the pattern of revenue loss will continue.

“You would assume revenue losses would continue to increase at the same rate, and it looks like that’s going to continue as far as we can see,” Valentine said.

Had the study been based off 2012 numbers, revenue losses would have been higher, Johnson said.

“I think they were very conservative,” he said.

Convincing the public of the benefit of national legislation could be a challenge, Johnson said.

“There’s a knee-jerk reaction to anything that increases taxes, so a bill like that is hard to get passed because it increases taxes,” Johnson said. “What is often a more fruitful approach is to talk about tax reform.”

Valentine said he doesn’t think businesses would be opposed to state and national legislation in Missouri.

“Missouri retail sectors would not be opposed because it’s an advantage to them,” Valentine said. “Large, national (businesses) who aren’t collecting would be opposed.”