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Are you an online tax cheat?

Just because you shop online doesn't you mean that you don't owe California taxes.

March 22, 2011

In the future, the Quill decision is bound to be revisited in the Web context. The justices may not see a difference between catalog sales and online sales, but they may. It's worth a go. And there are other possible solutions. Online retailers do so much business in California that many have warehouses and distribution centers here, and those brick-and-mortar facilities, more than relationships with advertising affiliates, are likely to pass the Quill nexus test.

Also, Congress could and should adopt legislation specifically allowing states to require Web retailers to collect and remit taxes. Such an attempt was made last year but was dropped, in part because the GOP took over the House and wants nothing to do with taxes, and in part because of a backlash from those who falsely suggest that this would impose a new tax rather than one that has been on the books -- in California, at least -- for more than 75 years.

In the meantime, Californians who are losing out by suffering bumpier streets and underfunded schools should not allow their state government to merely fret about the situation. The Board of Equalization is surely one of the nation's most obscure elected bodies, and when it comes to collecting taxes on out-of-state sales, it is one of the most ineffective. It could do a far better job of informing online shoppers of their tax obligations and collecting unpaid taxes.

Just try to navigate the BOE site today to try to figure out if you owe tax, and if so how much and how to pay it. Until online sellers calculate the taxes for shoppers (and no, it's not hard to track rates in some 7,500 jurisdictions across the country; it takes a simple software add-on) then add it to their bills and remit the proceeds to the state, the BOE could and should get rid of its ridiculous made-for-print forms, do the math and make paying the tax online with a credit card as simple, if not as painless, as buying a pair of Ferragamos online.

The board's newest member, George Runner, is one of those who criticized Skinner's bill. But to Runner's credit, he acknowledges that the board has to do a better job informing Californians of their tax obligations. Let's hope that with Runner on the team, the board will finally make it simple for online shoppers here to know the law and comply with it.

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