Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: MONDAY, July 19, 1993                   TAG: 9307190078
SECTION: VIRGINIA                    PAGE: C-1   EDITION: METRO 
SOURCE: Associated Press
DATELINE: RICHMOND                                LENGTH: Medium

PUBLIC-RELATIONS CAMPAIGN HELPS FILL STATE'S COFFERS

Honest taxpayers who voluntarily paid $477,211 in taxes on out-of-state mail-order purchases can take a smidgen of credit for Virginia's general-fund surplus.

Gov. Douglas Wilder announced last week that the state ended the 1993 fiscal year with $103 million in excess general-fund revenue, mostly because of one-time corporate income tax payments.

But a tiny part of that excess came from the 15,093 citizens who responded to the state's campaign encouraging them to ante up the "consumer-use tax" on items purchased through catalogs and television home-shopping programs.

The Department of Taxation had no idea how many people would respond, so money generated by the public-awareness campaign was not included in 1993 revenue projections.

The amount collected is nowhere near the $60 million the state estimates is owed each year, but Department of Taxation spokeswoman Janet Freisner said officials were pleased with the figure.

"I think we did pretty well," she said. "It took a relatively small effort on our part. Next year we may do more."

Few people realize that they must pay a 4.5 percent tax on items worth $25 or more that they buy from out-of-state sellers who do not charge Virginia residents sales tax. A few mail-order companies voluntarily collect the state sales tax, but most do not.

Cathleen Parker, spokeswoman for L.L. Bean in Freeport, Maine, said the mail-order giant does not collect state taxes. She said the company is awaiting action by Congress, which has been considering legislation that would force catalog companies to collect the taxes.

So in an effort to get the taxes directly from consumers, Virginia put a consumer-use tax form in the individual income tax packets mailed to taxpayers. The Department of Taxation also issued news releases and bought newspaper ads reminding taxpayers of their obligation to pay the little-known tax.

"We hope to continue the campaign year after year until it is something people are real familiar with," Freisner said. "More and more people are shopping by mail, and states have to protect their interests."

Freisner said the department would prefer that vendors collect the tax, because "it would be more convenient for both the taxpayer and the state."

Collecting from individuals also might not be the best route from a public relations standpoint. Freisner said she has heard stories about Virginians who did not take kindly to the collection effort.

"We've seen people quoted in the newspaper saying, `They'll never collect one dollar.' Well, we collected 477,000 of them. Someone was listening."

Charles E. McCabe, president of Peoples Income Tax Service, said the tax preparers in his two dozen Central Virginia offices heard little grumbling from clients about the campaign. Some preparers felt obligated to mention the consumer-use tax, since the form was included in the state income tax packets, but others did not, McCabe said.

"It doesn't appear to be a requirement that we bring it up," McCabe said.

Freisner said the Department of Taxation will continue its campaign to educate the public about the consumer-use tax. She said the department has not estimated how much it may collect next year.