If you live in California, your days of being able to order from Amazon without paying sales tax are numbered. California Governor Jerry Brown just signed into law a bill requiring Amazon and a number of other on-line retailers to collect and pay sales tax on purchases made by Californians, even if they do not have physical facilities within the state. The tax takes effect as of September 15, 2012 and will, of course, include sales tax on e-books.
A funny thing is, this means that Amazon’s physical service to California residents could actually improve considerably as the company bites the bullet and builds the in-state distribution centers that it had been avoiding out of a desire not to have to collect and pay sales tax. It is estimated that California accounts for as much as 20% of Amazon.com’s overall market. And undoubtedly the additional tax revenues will help the budgetarily-embattled state when they start rolling in.
I have little doubt that the other 44 states that have sales taxes (five states don’t) will be watching how this goes and developing plans to enact their own similar legislation. It could be that the days of ordering online without paying sales tax may be numbered for all of us.
(Found via CNet.)
This will not include sales tax on e-books. California’s sales tax only applies to tangible objects. Digital downloads such as e-books aren’t taxed in California.
Don’t expect this not to be challenged since it directly violates the commerce clause of the US constituttion and Federal law trumps state law.
I really don’t see how California expects to be able to enforce this. It’s been litigated heavily already in the mail order days. Without a physical presence in the state a company is not obligated to collect sales tax for the state. No matter what the state tries to do.
Chris Meadows said, “…undoubtedly the additional tax revenues will help the budgetarily-embattled state when they start rolling in.”
Actually, no, they won’t. It’ll just allow the California nanny state to continue on with reckless spending.
“…undoubtedly the additional tax revenues will help the budgetarily-embattled state when they start rolling in.”
Why? People act like the money not collected just vanishes, when in all probability the $20 not spent on Amazon sales tax was spent locally on food, dinner, clothes, gas, or some other item on which tax WAS paid.
Nobody likes taxes. Still, if I buy a book at BN.com, I pay sales tax. Same book at Amazon, I don’t pay sales taxes. Clearly this benefits Amazon to the detriment of B&N, and discourages B&N from opening stores in new states. Legally, of course, California residents are supposed to pay sales taxes directly to the state… except there is no enforcement and few do so. It doesn’t seem unfair to me that everyone selling a ten dollar book pay the same tax regardless of whether they happen to own a storefront or operate on-line only.
As Doug mentions, California’s sales tax does not apply to digital downloads so kindle owners (and nook owners) need not worry.
Rob Preece