Californians go on Amazon buying spree
Beginning Sept. 15, Amazon and many other online retailers will begin collecting sales tax on purchases by the state's residents.
Online shoppers in California have reportedly gone on a spending spree, counting down the days until Amazon and other online retailers will have to begin collecting sales tax on their purchases.
A new state law takes effect Sept. 15, requiring out-of-state companies that do more than $1 million of business a year in California to register with the state and pay it sales tax on residents' purchases. (Post continues after video.)
That's going to add 7.25% to 9.75% to the purchase price, depending on the community in which the buyer lives, says the Los Angeles Times. No wonder folks are stocking up.
California expects to gain more than $83 million a year from Amazon sales alone.
In actuality, it's not a new tax. An LA Times editorial reminds people that they've always been required to pay the state a tax on their Amazon and other online purchases. They just haven't been doing it. The editorial says:
You do know, don't you, that you already have to pay sales tax on your online purchases? Yes, it's officially called a "use tax" rather than a sales tax because Amazon is an out-of-state company. But that's only a technicality. You owe the same tax, whether it's called a sales tax and your online seller calculates it for you (and adds it to your bill), or it's a use tax that you have to add up yourself and send in to the Board of Equalization (right away) or the Franchise Tax Board (on your state income tax return at the end of the year).
The same is true in a lot of other states. But if you, like most online shoppers, have overlooked or simply ignored that requirement, you can expect the fun times to end soon (unless you live in a sales-tax-free state like Montana).
One big change: Amazon is no longer opposed to collecting state sales tax and is, in fact, supports a federal law to make it a uniform requirement across the U.S. In the meantime, says CNN, the company got several states to delay sales tax collection in exchange for new Amazon facilities and jobs. California was one of them.
On Sept. 15, it becomes the eighth state to require sales tax from out-of-state online retailers. (Pennsylvania became No. 7 on Sept. 1.) Six more also have laws on the books to require the tax in coming years.
More on MSN Money:
- Is Jeff Bezos the next Steve Jobs?
- Amazon to hire thousands
- Do I have too much debt?
- Amazon debuts new Kindles at aggressive prices
- Find a better credit card
However, if a buyer cannot see and touch the item and it is the same price as in stores, what is then the benefit of using Amazon, other than the convenience of not having to shop around? Sometimes that will be good enough, but not for many of my purchases as I want some of them immediately and waiting for shipping is not an option. Those i will now buy in stores.
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