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Get Ready to Pay Sales Tax on Amazon Purchases

The online retailer will levy state tax on mail-order purchases beginning Sept. 15. Depending on where you live, that could add more than 7 percent to the cost of each purchase.

 

If you've got items sitting in your Amazon shopping cart that you've not yet purchased, you might want to consider moving into the checkout line.

In a little less than two weeks—Sept. 15, to be exact—Amazon will begin charging sales tax on purchases for California residents.

Up to now, buying online at Amazon.com saved customers money; no sales tax was collected.

But state lawmakers in California—a state which desperately needs cash—reached an agreement last year with online retailers, including Amazon, who agreed to begin collecting a sales tax in September. Those sale tax funds will be returned to the state.

According to the LA Times, about half of the projected $316 million raised in the first full year—and put into state coffers—is expected to come from merchandise sold by Amazon.

The agreement between Amazon and California may not last long. The Orange County Register reports that the agreement between the two parties was primarily a compromise meant to get a year's reprieve in collecting the tax in exchange for promises to add jobs and distribution centers in California.

Increased prices for online purchases is welcome relief for brick-and-mortar stores, who feel the playing field for customers will be a bit more level.

CNNMoney says Amazon already charges sales tax in six states: Kansas, Kentucky, New York, North Dakota, Texas and Washington. Pennsylvania will join California in sales tax charges in September. New Jersey, Virginia, Indiana, Nevada, Tennessee and South Carolina are all expected to collect state sales taxes from online retailers within the next few years, adding millions to state accounts.

States estimate they lose $23 billion in sales taxes each year - with around $11.5 billion of that stemming from online purchases, according to the National Conference of State Legislatures.

Meanwhile, Seattle-based Amazon has been expanding its physical presence in California, according to the SF Chronicle. The Chronicle says that in June, it leased 83,000 square feet just south of San Francisco's Financial District.

And in Sunnyvale, according to the Chronicle, "Amazon is reportedly close to signing up for close to 600,000 square feet at the partially completed Moffett Towers complex to house its Lab 126 subsidiary, currently in Cupertino. The lab is where the Kindle and other "easy-to-use, highly integrated consumer products" (including an Amazon smartphone) are being developed."

Amazon is also expected to open two California fulfillment centers that will employ at least 1,000 workers each in San Bernardino and Patterson.

If you're interested in applying for those jobs, Amazon has set up a website to receive applications.

 

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Sharon Levin September 05, 2012 at 03:38 PM
Yes! It's about time!! I appreciate the equity with bricks and mortar stores, but I mainly appreciate the income for our community. Woo Hoo!
Claire Felong September 06, 2012 at 02:45 PM
If we want more teachers, state park hours, public services, we must pay our share. I have not bought anything from Amazon because of this ruinous policy. We get the public services that we pay for.
Enquiring Mind September 06, 2012 at 09:35 PM
Claire, you can always report your out-of-state purchases on your CA 540. That's what a lot of us do and not just from Amazon.
Claire Felong September 10, 2012 at 01:31 AM
Enquiring Mind, yes, I know I can pay the tax on the 540 but Amazon has been riding on the coattails of brick & mortar businesses and has had an unfair advantage. How many people do you think are reporting the tax on the 540 as compared to those who are not? California is losing millions because most people are not reporting or are seriously underreporting.

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