California Grabs $ 96.4 Mln In First Round Of Online Sales Tax Collection

Some U.S. states — like California — are starting to see new revenue from sales tax on internet purchases
The California Board of Equalization said it made $96.4 million in sales tax on internet commerce from September-December 2012, which is the first full quarter that the state started collecting. This is good news for the California Department of Finance, which has a forecast budget goal of $107 million in new e-taxes for the fiscal year starting July 1, 2012.

While these numbers look great for the state of California, they’re a bit off from the estimates provided by a 2009 University of Tennessee study that said California would make $1.9 billion in 2012 revenue if it collected online sales tax. It also said states would miss out on $11.4 billion in 2012 revenue nationwide if they failed to collect online sales tax.
As of right now, Amazon collects sales tax in nine states (including California) and will collect in seven more over the next year.

Georgia is one the most recent to collect online sales tax. Amazon started collecting sales tax in Texas in July 2012, and California and Pennsylvania in September 2012.

Amazon has been fighting states that force it to collect sales tax for years (except in Kansas, Kentucky, New York, North Dakota and Washington). The e-tailer fled many states that attempted to force tax collection on the company, such as California and Illinois. But between states looking for ways to offset large financial deficits and brick-and-mortar stores like Best Buy complaining about Amazon being unfair competition, the issue swelled.

Amazon CEO Jeff Bezos said many times that his company would agree to collect taxes if there were some sort of federal legislation.

But eventually, Amazon finally broke down and started collecting sales tax in certain states, which allowed it to build more distribution centers within those states. For instance, Amazon announced that it would collect sales tax in New Jersey last May so that two Amazon distribution centers could be built. This led to faster shipping for customers, such as Amazon’s same-day delivery program, making it more competitive than ever.

But earlier this month, Amazon and Overstock.com challenged a New York law passed in 2008, which forces companies with affiliates within the state to collect sales tax.

However, Amazon said this law is unconstitutional because a 1992 Supreme Court decision said retailers that don’t have a nexus of operation in a state does not need to collect sales tax. While New York said that websites with purchase buttons for Amazon as well as other national retailers are local solicitors because they receive fees for doing so, Amazon said argued that web referrals are less like solicitors or a local sales force and are more like advertising.

Source:Reuters