Online retailers have been going back and forth to fight the online sales tax collection. Online retailers and California legislature reached a deal in 2011 that included a one-year grace period. That grace period is now ended.
What will online shoppers do now? Pay sales tax for online purchases at many online stores including Amazon and eBay.
What do retailers think about this change? One of the biggest online retailer Amazon said that the company will continue to offer better prices, and is not worried about this change. I am sure Amazon customers would disagree.
How about the State of California? Its Christmas for the lawmakers. The state is planning to hire more people to ensure the proper collection of online sales tax.
Online retailers have tried their best to avoid this day but it is hard to win against uncle sam.
Why does the State of California love online Sales Tax?
State officials of California are estimating that they can generate over $200 million a year to fill the budget holes by collecting online sales tax. Under the current use tax rule, Californians are supposed to pay the equivalent of sales tax on their state income tax. However, California rarely collects this tax and ends up losing about $1 billion every year.