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Uploaded: Thursday, September 6, 2012, 7:43 AM
Updated: Tuesday, September 11, 2012, 6:13 AM
Out-of-state retailers must start paying state sales taxes starting Saturday
Tax should show up on consumers' bills after Sept. 15
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by Jeb Bing
Pleasanton Weekly Staff
Out-of-state retailers including Amazon.com will have to start paying California sales taxes on merchandise sent here starting Sept. 15 and there already are reports of heavy orders to beat the system.
Although the sales tax has always been due on goods shipped here and for consumers who buy these goods, enforcement has been lax. Disputes in many states over how to collect sales taxes from out-of-state retailers, again mostly involving Amazon.com, have delayed states from implementing collection rules.
However, the state Board of Equalization has now sent letters to Amazon and at least 200 others whose shipping bases are outside the state to notify them of the policy change.
Steven E.F. Brown, writing in the San Francisco Business Times, said a law requiring out-of-state merchants to pay California sales taxes has been on the books since 1935, when the out-of-state boogeyman was the Sears mail-order catalog. More recently, it's been online giant Amazon.com Inc. that's been the Board of Equalization's focus.
A new California law, AB 155, now requires any retailer that sells more than $1 million in merchandise to California consumers and has had more than $10,000 in sales referred by an affiliate in the state must collect the use tax and pay it to the government.
Depending on where they live, Californians pay 7.25% to 9.75% in sales taxes, so the savings are substantial — especially on big-ticket items such as electronics. But bargain hunters are also stocking up on inexpensive goods such as food, DVDs and carpet cleaner, according to Andrea Chang, whose report on heavy sales ahead of the tax appeared in yesterday's Los Angeles Times.
Chang said that while Amazon won't say whether sales to California customers have spiked in recent weeks, judging from comments on social media sites and reportedly increased buying activity in other states before similar sales tax laws went into effect, many shoppers see these final days as an excuse to shop freely.
Her article quotes Abdel Ibrahim, a tech entrepreneur and trader from San Diego, as saying that he would buy a MacBook Air and MacBook Pro with retina display on Amazon before the cutoff, a move that will save him about $270 in sales taxes.
"It makes a huge difference," the 30-year-old said. "If there's anything else I can think of where I can fork up some money and save a couple hundred bucks, I probably will," he told Chang.
The tax revenue from these online sales is being lauded as a win for the debt-ridden state, which estimates it will see an additional $317 million annually as a result; more than $83 million of that is expected to come from Amazon alone, the Times article states.
Chang reports that it's also a victory for mom-and-pop shops and big bricks-and-mortar retailers, including Wal-Mart Stores Inc. and Target Corp., which have complained for years about what they called Amazon's unfair sales tax advantage.
"Merchants including Best Buy Co. were especially hurt when shoppers would "showroom," or check out products at the company's stores, but ultimately buy them online to avoid paying sales taxes. Now they will be on an even playing field, they say," Chang writes.
California online shoppers will start seeing the tax on their bills Sept. 15.Are you receiving Express, our free daily e-mail edition? See a sample and sign-up for Express.
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Posted by Billy Jeff, a resident of the Jensen Tract neighborhood, on Sep 6, 2012 at 7:54 am As usual, the idiots in government ("the state") as identified in this story, believe our tax revenues will increase by $317 million. No doubt it will go up but they have probably failed to account for people who will cut back their spending accordingly. The anticipated increase in futue revenues will be justification for spending increases and nobody will consider the liklihood that we are headed for another crash and recession.
Keep voting for the same people. You'll get what you deserve.
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Posted by liberalism is a disease, a resident of the Birdland neighborhood, on Sep 6, 2012 at 8:34 am
liberalism is a disease is a member (registered user) of PleasantonWeekly.com Anticipate a huge spike in sales for Amazon in the next week, followed by decreases in sales for internet suppliers with a Calif presence. The trick will be finding the out of state retailers that do not collect sales tax and do not charge an arm and a leg for shipping.
Amazon is a good retailer that had to cave into pressure from the tax and spend dems in this state that can't a balance a budget to save their lives.
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Posted by You Get What You Vote For, a resident of the Another Pleasanton neighborhood neighborhood, on Sep 6, 2012 at 11:14 am If you voted for any of the Democrats that currently rule this state, you brought this on yourself.
Many Republicans aren't much better.
If voters make this a win/loose issue for candidates, things will change. Otherwise, enjoy your new tax and just remember that "your" government always knows better than you how to spend your money.
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Posted by Amazon fan, a resident of the Another Pleasanton neighborhood neighborhood, on Sep 6, 2012 at 1:11 pm Thanks for the heads-up. I need to get my major purchases done this week.
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Posted by me, a resident of the Another Pleasanton neighborhood neighborhood, on Sep 6, 2012 at 2:55 pm Other states do this... why shouldn't ca? Why are we so special that we should be exempt?
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Posted by liberalism is a disease, a resident of the Birdland neighborhood, on Sep 7, 2012 at 8:28 am
liberalism is a disease is a member (registered user) of PleasantonWeekly.com Not every state charges sales tax, 'me'. I hope you feel the same way when the Bush tax cuts expire and you're left with less money.
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Posted by Joe, a resident of the Ruby Hill neighborhood, on Sep 7, 2012 at 12:39 pm The issue isn't just about taxes, it's about creating an even competitive playing field. The big hole next to Sports Chalet (Borders), and plenty of other brick and mortar retailers as well as e-com competition (Wal-mart.com for example) play the game one way, Amazon another. The on-line model has evolved significantly over the last 10 years and it is/was time to address the issue and even up the landscape. Furthermore, I work for a small manufacturer and we sell to a number of big box retailers who are the core of our business. Via Amazon's affiliate model there are huge number of small sellers (God's gift to retailing) who have/are creating the potential of major pricing erosion in the overall market, enough to endanger the existence of our business. We employ a workforce in CA, and in other states, pay taxes, why should they, through Amazon have an unfair advantage and the ability to impact our business in such a way? Again, the issue isn't just about taxes, it's about ensuring that all play by the same rules and appreciating that there are also ripple effects that you may not see...
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Posted by Jim, a resident of the Another Pleasanton neighborhood neighborhood, on Sep 7, 2012 at 1:14 pm "t's about ensuring that all play by the same rules and appreciating that there are also ripple effects that you may not see"
that is what I have been saying regarding China all along. Hopefully the CA example will be followed in the Federal level!
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Posted by Stacey, a resident of the Amberwood/Wood Meadows neighborhood, on Sep 7, 2012 at 1:26 pm
Stacey is a member (registered user) of PleasantonWeekly.com Joe,
Given that brick-and-mortar businesses are also able to sell online, the distinction between the two business models blurs. Additionally, an even playing field would include a business like Amazon having a physical presence on Main St. How do you feel about a little Amazon kiosk sitting outside of your business?
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Posted by Joe, a resident of the Ruby Hill neighborhood, on Sep 7, 2012 at 3:31 pm There is already a kiosk outside - it's the 1,000's of affiliates, many of whom have no idea of what they are doing - wrong/poor content, little product knowledge, but are great at discounting for no reason. The model only blurs in certain product channels -some are a lot more developed than others.
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