The threat has been looming for quite some time, and it is now just a few short weeks away from becoming reality. Legislation is going into effect requiring online retailers like Amazon.com and Overstock.com to start collecting sales tax on internet purchases by California consumers.
The new measure will level the playing field for brick and mortar retailers to compete with the internet retailers, as one of the main attractions of buying online was to not pay sales tax. The online retailers may now have to be more creative to attract and hold their buyers.
California law has long required consumers to pay the taxes on their own, called a “use tax”, however tax collectors have not routinely enforced the obligation for non-commercial transactions and, according to state officials, less than one-half of 1% of taxpayers voluntarily pay.
As possibly the largest online retailer impacted, Amazon has vehemently fought this measure. But the widening state budget crisis made the tax measure even more critical.
The initial legislation was set to go into effect earlier, but Amazon struck a deal last fall with the state of California to put off the collection of the sales tax until September 15, 2012. In exchange for the months-long reprieve, Amazon agreed to create 10,000 full time jobs and employ 25,000 seasonal workers by the end of 2015. The effects of this negotiation will have a direct impact on the Inland Empire economy , as Amazon prepares to open a west coast distribution center later this year in San Bernardino, on the property of the former Norton AFB. Rumors are that Amazon is gearing up to be able to provide same-day delivery service, and these localized warehouses and distribution centers will help them meet that goal.
It is estimated that the sales tax collection will amount to hundreds of millions of dollars in additional revenue to California to help support critical services, such as education and public safety.
Saturday, September 1, 2012
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