Amazon Starts Collecting Sales Taxes in CA

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Some say as California goes, so goes the nation. So the California law that went into effect Friday, requiring online retailers like Amazon to pay sales taxes, may have implications for the rest of the country.

Already 8 other states have enacted similar laws.

As of July 1, Amazon must collect sales taxes on purchases that Californians make on the Internet. The law is expected to help level the playing field with brick and mortar retailers who have been charging for sales tax for decades.

Amazon to start collecting sales taxes in CAAmazon, however, has called the bill unconstitutional and said it refused to pay the sales tax, reported the Los Angeles Times. Amazon last week did what it’s done in other states which have passed similar laws—it told its local Internet marketing affiliates that it will no longer pay them. Affiliates are smaller sites that get commissions for referring their visitors to Amazon. If the affiliates have a physical presence in a certain state, then that state justifies a sales tax.

This all stems from a 1992 Supreme Court ruling that says states can’t force retailers to collect sales taxes unless the retailers have a physical presence in the state.

The California law goes beyond the similar passed in states such as Illinois, Minnesota, Hawaii and Vermont.

It says that California may collect sales taxes from a retailer if it designs or develops products. Amazon sources its Kindle from a plant in California, said The Wall Street Journal.

California tax officials said they will start sending out notices of the new tax to out-of-state Internet sellers who are immediately expected to begin collecting sales taxes.

Source: Los Angeles Times

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3 Comments

  1. You want to solve this problem then how about a flat rate internet sales tax. In our area people can simply cross the river to avoid paying sales tax and I can tell you from first hand experience that many people here do that. The internet has only made that worse as people come into my store everyday and tell me about how they can avoid paying tax by buying online or crossing that river. It is unfair that so many companies are avoiding charging taxes by doing business online. How much revenue is being pulled out of the local communities with this practice? As for costing the end user more money… I don’t think so. The end user is only going to be loyal to the end price in todays economy so finding a way to level the sales tax field would benefit the brick and mortar stores which would benefit the communities they do business in.

  2. I agree with you that everyone hates paying taxes, the idea that Amazon has an \\"unfair\\" advantage is not its self unfair, it is an advantage and that is why states have no sales tax to have companies like Amazon stay in their state and create jobs and taxes for that state not for other states if California wants to collect more revenue they need and entire new tax structure. What Amazon has it was many large industries in California get such as the entertainment industry pays less tax to keep jobs in the state. If you need something more recent look at what the state of CA just did for Twitter who threatened to leave. Every state should be business friendly not a tax everything, this costs the end user the most not the company.

  3. I hate paying tax. Everyone does. But Amazon and online sellers have had an unfair advantage for many years. It is bad enough that brick and mortar can’t compete with low overhead/high turnover sales. They should be required to support the communities in which they do business. Especially in theses times of fiscal distress. Fair is fair.

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