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Last day for Amazon.com tax-free shopping in California

September 14, 2012|By Marc Lifsher
  • An Amazon distribution center in Goodyear, Ariz.
An Amazon distribution center in Goodyear, Ariz. (Ross D. Franklin / Associated…)

SACRAMENTO -- Amazon.com shoppers, desperate to grab some extra savings online, are rushing to beat a midnight deadline for avoiding payment of the California sales tax.

After years of controversy, the world's largest online retailer is to begin collecting state and local sales taxes Saturday on California purchases.

Depending on where you live, sales tax ranges from 7.25% to 9.75%

"Definitely stocking up ... can't beat 8 or 9% savings," tweeted Patrick Chen, who identified himself as an Internet game developer.

New tax revenues to state and local governments, generated just by Amazon, are expected to be as high as $100 million during the first year, California tax officials said. The total from all Internet sellers could reach $317 million for the fiscal year that began July 1, they said.

Much more money is expected to flow into government coffers in coming years as e-shopping expands.

Both Amazon and the state tax collector, who have been at loggerheads for years over the issue of Internet sales taxes, say they're prepared for the change.

"The agency is ready," said Jerome E. Horton, chairman of the Board of Equalization, which administers the sales tax. The agency plans to hire up to 35 new auditors, collectors, lawyers and other personnel over the next three years and will redirect to the Internet sales tax effort some of its 90 existing investigators on an "as-needed basis," he said.

The agency's staff should have a good sense of which of the hundreds of out-of-state Internet sellers should be collecting California sales taxes and how much money they should be sending to Sacramento, Horton said.

"We expect some to seek to gain market share by advertising that they're not collecting, telling the whole world," he said. "But, we'll be listening as well."

For now, Horton said he's pleased that Amazon is "playing by the rules."

After fighting legislative efforts to force it to collect sales taxes, Amazon last year struck a deal with Gov. Jerry Brown. The company promised to open two million-square-foot distribution centers in Northern and Southern California and to start charging sales tax as of Saturday.  

The deal resulted in "a win-win law that has allowed us to expand our investment and job creation in the state," said Amazon spokesman Scott Stanzel. Amazon's experience in states where it collects the sales tax proves that "we offer customers the best prices with or without sales taxes" in addition to having "vast selection and fast delivery."

ALSO:

Amazon lap dances the anti-tax crowd

California to target web retailers for sales tax

Californians spend freely on Amazon.com before sales tax


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