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California Sales Tax & Cyber Monday

  • Nov 23, 2011 | Will Frei

Cyber Monday, the Monday following Black Friday, has become the biggest online shopping day of the year. This year The Los Angeles Times alerts California shoppers that they could face tax penalties should they get audited after failing to pay use tax.

The Times reports on a warning issued by the California Franchise Tax Board and "a coalition of California retailers," the Alliance for Main Street Fairness. The warning stated that if an online retailer does not collect "a base 8.25% sales tax on an Internet purchase," then the buyer must pay use tax at that rate for the items purchased. 

To aid shoppers, the Alliance has released Golden State Shopping Tips, a guide that gives "five easy steps" to use tax compliance. The steps include the following: 

  1. Determine if you are charged sales tax on an Internet purchase. If so, ignore the remaining steps.
  2. Keep receipts and invoices.
  3. Calculate local and state use tax rate on the California Board of Equalization's (BOE) website.*
  4. Complete a "Use Tax Return" form.Pay taxes.
  5. One can do this on the annual state income tax return.

*Additionally, one can simply use our sales tax calculator to calculate the rate.

Despite these admonitions from the Franchise Tax Board and the Alliance, the Times points out that currently "fewer than 1% of individual Internet shoppers pay the use tax." The extra effort involved in calculating and paying use tax may discourage individuals from seeking tax compliance on their online purchases. Furthermore, the Times notes that California "doesn't attempt to collect the money on most transactions."

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Will Frei
Avalara Author Will Frei
Will Frei covers sales tax news including best practices, legislation and sales tax technology. He is the Social Media Manager at Avalara.