California has joined a growing list of states where consumers have to pay sales tax when shopping on Amazon (NASDAQ:AMZN). The sales tax obligations surrounding e-commerce are hazy at best, but the California State Board of Equalization has made it clear that the holiday is over.
As Amazon corporate communication manager Scott Stanzel has pointed out, “Sales tax collection depends on the tax obligations of the seller.” In this case, it is Amazon’s responsibility to collect the appropriate sales tax (between 7.25 and 9.75 percent) on items it sells to California. To ensure that Amazon complies, the State Board of Equalizatio,n has issued a loaded statement.
“You can assume we’ll have ways of finding out who is holding stocks of goods in California. We have enforcement authority to obtain information in a variety of ways. We’ll be approaching them with respect to their tax obligations.” The board is also hiring 35 attorneys, auditors, and tax collectors to enforce its crackdown.
California is struggling financially right now. Shoring up its sales tax losses from e-commerce will help with its debt problems, but the state was also lobbied by brick-and-mortar stores for the policy enforcement. Retailers like Best Buy (NYSE:BBY) made the case that Amazon customers effectively received a discount equal to the sales tax. This sort of discount is impossible to compete with. But Amazon does not expect the sales tax to cut into its sales or market share. “We offer customers the best prices with or without sales tax,” said Stanzel.
Amazon already collects sales tax in Kansas, Kentucky, New York, North Dakota, Pennsylvania, Texas, and Washington. It is slated to begin collecting sales tax in New Jersey, Virginia, Indiana, Nevada, Tennessee, and South Carolina in the coming years.
Amazon will not have to collect sales tax on orders it fulfills for third-party vendors.
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