California Online Sales Tax

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California Online Sales Tax

Samantha Rivera, Staff Writer

Last year, the U.S. Supreme Court required internet businesses to collect state tax from customers. Beginning on Apr. 1, it now requires out of state businesses who make more than “200 transactions or $100,000 in California sales” to collect state tax from its shoppers. Brick-and-mortar retailers who previously collected taxes because of owning a store, office, or warehouse state that online consumers will no longer have tax-free shopping.

The organization Consumer Action aims to advocate for consumers in the United States. Joe Ridout, a part of this organization stated, “This is something that has been in the works for a while since the Supreme Court decision last year. It was an exception that was made for online retailers at a time when online retailers were the minority and brick and mortar sales were dominant, but now it’s the opposite.” Rideout added, “Generally speaking sales taxes are by definition regressive and they hurt the poor more and there is an argument that this is not a good way to help California’s economy because California already has the most economic inequality of any state in the union.”

Many consumers disagree with the new charges. Steven Ananas, an online shopper argued, “I buy a tremendous amount on Amazon like everyone else. My wife and my daughter all buy on Amazon and outside of that not a ton. Is that going to change? Not at all, because it’s easy.” However, these rulings are not considered permanent. State senators Autumn Burke, Mike Mcguire, and D-Healdsburg are working on the bill AB-147 which potentially could raise the sales for mandatory tax collection up to $500,000 for online companies such as Amazon, eBay, and Etsy. This bill proposes that online companies will be required to have sellers pay instead of online shoppers which could greatly benefit the consumers.

Other bigger online retailers are estimated to receive $127 billion which is 15.2% higher than a year ago. Businesses which do not have to collect taxes have to also face costs between $8 billion and $33 billion in tax revenue. However, these rulings will also affect smaller companies and retailers by increasing their expenses. The Supreme Court has decided that those who do not have a “physical presence” in state are agreed to avoid collecting taxes making it easier to handle and benefitting smaller businesses. Smaller online retailers hope to receive their lost sales. These changes may also affect the profit received by the state, which is estimated to be around $500 million from the tax alone.

 

Photo courtesy of STANISLAWSKIANDCOMPANY.COM