California Grabs $96.4 Million in First Round of Online Sales Tax Collection
February 20, 2013 7:11 PM
comment(s) - last by
This amount is strictly for the September-December 2012 quarter
Some U.S. states -- like California -- are starting to see new revenue from
sales tax on internet purchases
from the likes of Amazon.
The California Board of Equalization said it made $96.4 million in sales tax on internet commerce from September-December 2012, which is the first full quarter that the state started collecting. This is good news for the California Department of Finance, which has a forecast budget goal of $107 million in new e-taxes for the fiscal year starting July 1, 2012.
While these numbers look great for the state of California, they're a bit off from the estimates provided by a 2009 University of Tennessee study that said California would make $1.9 billion in 2012 revenue if it collected online sales tax. It also said states would miss out on $11.4 billion in 2012 revenue nationwide if they failed to collect online sales tax.
As of right now, Amazon collects sales tax in nine states (including California) and will collect in seven more over the next year.
Georgia is one the most recent to collect online sales tax. Amazon started collecting sales tax in Texas in July 2012, and California and Pennsylvania in September 2012.
Amazon has been fighting states that force it to collect sales tax for years (except in Kansas, Kentucky, New York, North Dakota and Washington). The e-tailer fled many states that attempted to force tax collection on the company, such as
and Illinois. But between states looking for ways to offset large financial deficits and brick-and-mortar stores like Best Buy complaining about Amazon being unfair competition, the issue swelled.
Amazon CEO Jeff Bezos said many times that his company would agree to collect taxes if there were some sort of federal legislation.
But eventually, Amazon finally broke down and started collecting sales tax in certain states, which allowed it to build more distribution centers within those states. For instance, Amazon announced that it would
collect sales tax in New Jersey
last May so that two Amazon distribution centers could be built. This led to faster shipping for customers, such as
Amazon's same-day delivery
program, making it more competitive than ever.
But earlier this month, Amazon and Overstock.com challenged a New York law passed in 2008, which forces companies with affiliates within the state to collect sales tax. However, Amazon said
this law is unconstitutional
because a 1992 Supreme Court decision said retailers that don't have a nexus of operation in a state does not need to collect sales tax. While New York said that websites with purchase buttons for Amazon as well as other national retailers are local solicitors because they receive fees for doing so, Amazon said argued that web referrals are less like solicitors or a local sales force and are more like advertising.
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2/21/2013 2:44:31 AM
It's absolutely illegal to force e-tailers to collect state sales tax for states where they do not have a physical sales outlet. The states can spin all they want but eventually this will be taken to the Supreme Court where the states will lose. State sales tax is predicated on the sale actually transpiring within the boundries of the state.
For years states have been trying to extend by association, their basis for illegally generating revenues from people who purchase online from out of sales e-tailers, i.e out-of-state sales, NOT in-state-sales. Most people don't buy out-of-state to save a few dollars on sales tax, they buy out of state to get the best price, service and buy from e-tailers that have the specific item's they desire, available. The reason many people buy online is convenience, not to avoid sales-tax.
When state legislators earn their salaries and benefits, then I will start paying sales tax for items I buy online from out-of-state that are not under laws taxable. Any e-tailer that is required under law to charge state sales tax already does so. It's time to take this matter to the Supreme Court and force the states to stop double-dipping into the pockets of tax payers to fund fiscal mismanagment by state legislators.
Bad Buy's issues have nothing to do with sales tax, it has to do with poor product selection, corrupt customer service IME and bad management - the perfect storm that is putting them out of business.
"Intel is investing heavily (think gazillions of dollars and bazillions of engineering man hours) in resources to create an Intel host controllers spec in order to speed time to market of the USB 3.0 technology." -- Intel blogger Nick Knupffer
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