September 06, 2012
California will hire dozens of specialists to enforce a new law requiring Internet merchants to collect state sales tax — an effort that could bring in more than $300 million a year for the cash-strapped state.
The state Board of Equalization, which collects taxes, announced on August 30 that it will spend $10 million over the next three years to hire nearly 100 new state auditors, lawyers and other specialists for the effort.
Many online retailers based out of state, including Seattle's Amazon.com, had avoided adding state sales taxes to their prices because they had no business operations on the ground.
Brick-and-mortar stores, who must collect taxes of up to 9.75 percent, had long argued that was unfair competition.
A new law passed last year as a compromise with Amazon.com expands the state sales tax requirement. It now applies to out-of-state online merchants that do substantial business in California.
That includes those who sold more than $1 million worth of goods to California shoppers in the past year and had more than $10,000 in sales referred to them by California-based affiliated websites, the Los Angeles Times reported.
“This law is a giant step forward,” said Jerome E. Horton, chairman of the Board of Equalization. “It will help California collect much-needed revenue to support critical public services.”
The Board of Equalization estimated that more than 2,000 out-of-state online retailers may have to collect state taxes under the new law but it will take time to identify them.
Hence, the new enforcement effort.
Amazon.com, the nation’s largest online retailer, agreed to start collecting state sales taxes on Sept. 15.