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Amazon Tax Takes Effect in California


Amazon Tax Takes Effect in California

This Saturday, Amazon.com began collecting and remitting sales tax for purchases made by residents of California. The online sales tax will be a welcome addition to state coffers. Amazon.com has been collecting sales tax in its home state of Washington since it first began selling books online, back in 1995. The online retail giant also collects taxes in six other states, including New York, Kansas, and most recently, Texas and Pennsylvania. Amazon.com enumerates its sales tax requirements on its website. 

According to a news release from the California State Board of Equalization, AB 155 "does not create a new tax -- the California Use Tax has been on the books since 1935." Rather, AB 155 "expands the types of out-of-state retailers required to collect the use tax. When AB 155 takes effect September 15, some additional out-of-state retailers, including Internet retailers, will collect the use tax at the point of sale, and California consumers will begin to see the tax on their bills.”

Snapshot

The so-called “Amazon Tax” requires any out-of-state retailer with substantial nexus in California to collect and remit sales tax. Substantial nexus includes, but is not limited to, any out-of-state retailer that "... has sold more than $1 million to California consumers in the past year and has had more than $10,000 in sales referred by an affiliate operating in California." Earlier this month it was reported that California will hire approximately 100 new state auditors to help enforce the new law, AB 155.

Impact on California Residents

Californians have filled their virtual carts in earnest before Saturday in order to avoid paying the tax. Yet Jerome Horton, Chair of the California State Tax Agency, reminds Californians in a recent new release that buying "before Saturday does not mean you get off tax-free." He's referring to the fact that if "consumers do not see a line item for the sales tax charged on their bills when making these purchases, they are responsible for paying the use tax on their own...."

Horton adds that it is "important Californians and those who sell products to people in our state do their part and pay the use tax that is owed which helps fund our schools, roads, and other vital services in the community."

 

 


Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.