Online Shoppers Owe California Taxes

Ignored tax still required by state

By By Consumer Bob
|  Monday, Dec 8, 2008  |  Updated 4:04 PM PDT
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Online Shoppers Owe California Taxes

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Online shopping may still require paying taxes.

Don't call it a "Sales Tax" but California shoppers still owe taxes on items purchased out-of-state.  It's called a "Use Tax" and it is owed at the same rate as the sales tax rate.  And before you think it's a new law realize it has existed since 1935.

Many people choose to shop online to avoid paying sales tax, according to David Rivera, General Manager for George's Camera in San Diego.  But Rivera said, "There are still taxes that are your responsibility to pay regardless of whether you buy them from me in California or you buy them online from an out-of-state reseller."

The use tax law was established to eliminate the price advantage of out-of-state retailers would have over California businesses that collect and send in sales tax.  That was before online sales became a common practice. Now tens of thousands of California consumers are shopping over the internet and not paying the proper taxes.

Anita Gore with the State Board of Equalization said $1.1 billion in use tax goes uncollected each year.  There is a line on the California State income tax return that allows filers to pay their use taxes each year..

The question now is whether a state that is looking for additional revenue will crack down on consumers that don't pay their use tax?  And as for local retailers like David Rivera, he would like to see people follow the law to take away the "unfair advantage" online businesses have over his store.

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