The Daily Deduction

Income Tax Popcorn – Amazon to Add Sales Tax to Shoppers in California

Shoppers in California are now required to pay a little more when making purchases online at Amazon.  The world's largest online retailer for books, music, electronics, entertainment, and more is now required by California law to add between a 7.25 and 9.75 percent sales tax when purchasing from Amazon.

Physical storefronts are now gaining ground in the online tax debate as they have long held the position that sales taxes need to be imposed on online outlets to level the playing field.  Online stores that don’t collect sales tax have maintained an advantage over brick-and-mortar stores because they are able to keep prices low.  Out of fear that revenue from online sales would drop, Amazon resisted collecting sales tax until recently.

Amazon currently collects sales tax in Kansas, Kentucky, New York, North Dakota, Washington, Texas, and now, California.  A preliminary study done in Texas—which began collecting sales tax in July-- now suggests that sales tax has had no effect on Amazon's sales.  Numbers from the survey of over 2,600 people suggest that, while pricing is important to online shoppers, the convenience of online shopping affects spending behavior even more.


[ Sources: Get Ready To Pay Sales Tax on Amazon – CNN Money

The Sales-Tax Effect on Amazon: Nada – WSJ ]

Posted To: The Daily Deduction By: Lauryn on 9/19/2012 11:05:00 AM
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