Amazon deals with California on sales tax

October 6th, 2011 → 7:21 am @

Creative Commons License photo credit: briweldon


From comes this news :

Amazon deal with California may set precedent for online tax collection

Here’s the highlights that affect you if you sell via Amazon or are on on-line retailer yourself:

California braced for a fight this year when its budget deal included a provision to force online retailers — by far the most prominent among them — to collect sales taxes on purchases made by the state’s residents. This was something new. Other states have passed so-called “Amazon laws” requiring online tax collection, but the company has generally defied them. It took New York to court. It canceled its relationships with affiliates in Arkansas, Colorado, Connecticut, Illinois, North Carolina and Rhode Island, then argued that it wasn’t required to collect sales tax in those states because it lacked a presence there. It even offered Texas 6,000 jobs if only the state would give up the idea of forcing it to collect.

Then, something surprising happened. Amazon backed down. The company struck a deal that will require it and other online retailers to begin collecting sales taxes in California starting in fiscal 2013, after a one-year grace period. Last Friday, Governor Jerry Brown signed the agreement into law.

As both sides are quick to point out, this dispute isn’t about whether taxes are owed on internet purchases. Everyone agrees they are. The dispute is whether online retailers should have to collect them. If they don’t, the responsibility falls to consumers, who often don’t even know about the requirement. In practice, the taxes are rarely paid.

So, the landscape is changing for sales tax and on-line sales.

Carol Topp, CPA

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