Boulder loses somewhere between $2.5 million and $5 million a year in potential revenue to untaxed online sales, city officials said.

As online sales make up an increasing share of the retail market, Boulder officials say they need to find a way to capture some of that lost sales tax revenue.

Online retailers reported a 17 percent increase in Cyber Monday sales over 2011, bolstered by the convenience of mobile apps that make it easy for people to shop on their phones. Industry analysts expect online shopping to account for 10 percent of all holiday spending this season.

The city has made changing federal law to facilitate the taxing of Internet sales a legislative priority.

Boulder Finance Director Bob Eichem said he developed the estimates of lost sales based on a nationwide and state-by-state study done by the University of Tennessee. The range is large, Eichem said, because Boulder doesn't tax many business-to-business sales and does tax some things the state doesn't, making apples-to-apples comparisons difficult.

But Eichem has little doubt the city is losing out on a lot of money.

"Boulder is a very tech-oriented city, and we have a lot of people who use technology to a high degree," Eichem said. "We also have a lot of students, and they use technology to a greater degree than older people."

Brad Feld, managing director of the Foundry Group and co-founder of the startup accelerator TechStars, said Wednesday that he doesn't know enough about the city's situation to comment, but he called the state's previous attempt to tax Internet sales "a disaster."

After Colorado passed a law asking in-state "affiliates" of online retailers to collect sales tax, online retail giant Amazon fired its Colorado affiliates, including Feld.

However, Colorado's law doesn't even require that affiliates collect the tax. They just have to inform consumers that they owe it.

Feld has also publicly opposed the Main Street Fairness Act, a federal bill that would require online retailers to collect state and local sales tax.

Boulder businesses with stores and online operations do have to pay local sales tax on their online sales.

David Bolduc, owner of the Boulder Book Store, said he spent hours at the Capitol in 2010 lobbying for sales tax to be collected on Internet sales, only to see the political power of online retailers remove any teeth from the law that was passed.

His bookstore suffers a lot from Amazon's lower prices. Bolduc said he's seen shoppers using Amazon's app to get a discount on merchandise they check out in his store before buying online.

Collecting tax on those sales wouldn't eliminate Amazon's price advantage, but it would help, Bolduc said.

"It's just one more piece," he said. "People think, 'Oh, I don't have to pay the tax.'"

Bolduc hopes a political coalition of cash-strapped local governments and small businesses might change the law.

"Maybe there is more understanding now of what is being lost, more understanding of the endangeredness of brick-and-mortar stores and small businesses," he said.

Contact Camera Staff Writer Erica Meltzer at 303-473-1355 or meltzere@dailycamera.com.