By law, we are all required to declare items for which we did not pay sales tax because it was shipped across state borders. In practice, few actually do. However, the members of the Board of Equalization are signaling that they intend to crack down on cross-state purchases.
As Internet commerce continues to flourish, California tax officials have a piece of advice: Save your online sales receipts.
You’ll need them to report your “use tax,” the money that the state collects on taxable purchases made from out-of-state sellers.
The California State Board of Equalization wants to tighten up use-tax collections, which totaled just $5.5 million. Officials estimate that another $1 billion went uncollected.
I’ll admit I’m not as good as I should be on keeping track of my online purchases. I’ve always paid something for my use tax, but it’s not always easy to tally all those purchases up. I suppose I should be fortunate for gmail’s searching capabilities, but like last year I’ll probably just end up estimating and paying 40-50 in use taxes.
The thing about this is that we have a fake moratorium on “taxing the internet.” So, what we end up doing is having honest people pay a few bucks each year, and creating a complicated system. And for the vast majority of people who don’t pay a use tax to their home state, laws aside, end up getting a subsidy to buy at these large companies, like Amazon. Why, prey tell, do the Amazons of the world need this tax benefit. It’s certainly not an overwhelmingly difficult task to create a database with sales tax rates to charge the sales tax just like any purchase.
I honestly never thought I would be arguing to end the internet sales tax morotorium, but here I am. I’m sure it’s not a particularly popular sentiment in my neck of the woods, but it’s, IMHO, the best solution. These complicated systems of trying to get people to pay use tax, and the subsidies to large corporations over small businesses just don’t make sense from a policy perspective.