SACRAMENTO, CA - The days of skirting the sales tax for most online purchases are numbered for Californians. The state Department of Finance certified this week no federal Internet tax law exists.
That opens the door for a new state law to take effect Sept. 15 when e-tailers like Amazon and Overstock must start collecting sales tax ... a big annual boost to state coffers.
"The estimate for the income the state will receive from the collection of the tax is ... low-end: $250 million ... up to $500 million," said the law's author, Assem. Nancy Skinner, D- Berkeley,"So that would be great in this time of deficits."
Most Californians don't know that if an e-tailer doesn't collect the sales tax, they're supposed to pay it on their own when they file their income taxes.
Davis bookstore owner Alzada Knickerbocker fought for nearly a decade to level the playing field.She says brick and mortar stores have lost customers to Internet competitors that often don't charge a sales tax.
"People looking for lesser cost would naturally gravitate to that source. We always felt it was an unfair advantage," said Knickerbocker.
With an army of lobbyists, Amazon has been quashing state efforts to force e-tailers to collect sales tax on companies that don't have a physical presence in California. The deal the Seattle-based company made with California leaders was to seek a federal Internet tax, and if that failed, the state tax would go into effect.
What the state got out of the delay was Amazon promising to open facilities in California and hire hundreds of people. The first warehouse in Patterson is already under construction.
Online shopper Gregory Clark is fine with paying the sales tax.
"It's just crazy to have these large retail outlets escape taxation," he said. "Everyone is concerned about the survival of downtown and the survival of local commerce."
Opponents, on the other hand, are upset they can no longer get away with a deal.
"I think that's going to make me do a lot of shopping before September 15th. (Laugh). Yeah, that's not good," said Earlyn Noel, who shops online.
"It's unknown whether an online sales tax will change behavior and drive people to stores. The one advantage e-tailers still have is convenience."