The effort to collect sales taxes on Internet transactions gained momentum recently. Last week the New York legislature passed a bill that would require Internet retailers doing more than $10,000 a year in business to collect and remit taxes on sales to customers in New York. This article in the New York Times addresses the issue, noting that since 2003 New York’s state income tax form has contained Line 59, on which taxpayers are required to list unpaid sales taxes on Internet sales from non-New York retailers. In 2006 five percent of New York taxpayers included information on Line 59, with an average tax owed of $95.36. I expect that most taxpayers are unaware that they are required to pay in-state use taxes on out-of-state purchases that were untaxed at the time of purchase because, for instance, the taxpayer had the item shipped from the store to their home. The requirement to pay use taxes has been around for some time–since the 1960s in New York, via Line 56 on older tax forms–but the only enforcement I recall involved disgraced Tyco CEO Dennis Kozlowski’s evasion of sales tax on a multi-million dollar purchase of paintings. Kozlowski purchased the paintings in London and had them shipped to his home in New York via Tyco’s headquarters in sales-tax-free New Hampshire, for the purpose of avoiding New York sales tax. New York indicted Kozlowski for tax evasion but ultimately dismissed the charges. New York expects to collect about $50 million a year from the new law.