Amazon to start collecting sales tax in California on September 15

Amazon to start collecting sales tax in California on September 15

I’ve written pretty extensively about the issue of equal collection legislation, where out-of-state retailers (including internet) collect sales tax at the time of sale, the same way the brick and mortar stores do. Amazon will start doing that for California customers a week from Saturday on September 15, 2012.

L.A. Times article

I’m looking forward to it.

That will seem counter-intuitive to some people, but it’s important to note that we are not going to be charged any more tax…the question is how does it get paid.

In California, we are supposed to be paying a “use tax” (equivalent to a sales tax) on out-of-state purchases on our annual state taxes. We do that in our family, and it’s a bear. We have to figure out what we bought, whether or not we  already paid taxes, and whether or not it is a taxable item in California. Then, we pay a not inconsiderable lump sum. Can you imagine doing that with everything you bought from the local store?

The problem all along has been that many people don’t do that, and California doesn’t have the resources to go after them.

In this situation, no one will owe more taxes, but many people will pay more taxes.

This does add expense for Amazon, but they already collect sales tax on many sales, so they have a mechanism in place.

Will this hurt Amazon’s sales?

I don’t really think it will all that much. I know they’ve said that it hasn’t significantly hurt them in other markets where they collect the sales tax/VAT (Value Added Tax) for their customers.

In fact, there are a lot of sites encouraging people to buy a lot right now, to avoid the tax collection…presumably, that advice is for people who haven’t been meeting their tax obligations up to this point. :)

That bump may help Amazon in the short run.

What do you think?

Note: I believe we don’t pay sales tax on e-books delivered electronically in California, so this doesn’t impact Kindle book purchases.

This post by Bufo Calvin originally appeared in the I Love My Kindle blog.

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4 Responses to “Amazon to start collecting sales tax in California on September 15”

  1. Lona Jennings Says:

    I live in Washington State so I’ve always paid taxes at Amazon, 9.5% currently. In fact in Washington state, sales tax literally varies city by city because local jurisdictions can tack on extra mils for local use. Must be a real bear for Amazon to keep track of. Wonder if California and other states are that bad. Also I don’t envy them their sales tax reporting and transmitting. They’re going to have at least 51 different sales tax forms to fill out every month :) But that’s what comes with making the big bucks, right?

    • Bufo Calvin Says:

      Thanks for writing, Lona!

      I’ve heard there are about 8,000 sales tax jurisdictions in the USA. In California, I think it’s just by country.

  2. Man in the Middle Says:

    I don’t live in CA, but do plan to visit there soon. What happens tax-wise if I buy a Kindle book while there? I’m guessing nothing, so long as my account info is in another state. What state I’m in could often but not always be figured out from my curent IP address when connected to the Internet to order a book. If I recall correctly, CA also does not charge sales tax on intangibles like cell phone minutes, so perhaps Ebooks will be tax-exempt there anyway.

    • Bufo Calvin Says:

      Thanks for writing, Man!

      I’m in California, and in the past they have not charged sales tax on e-books delivered electronically.

      I believe the way it will work is that your home state will want you to report your purchase on your state taxes there…if your state collects sales tax on e-books.

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