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California Wants Sales Tax from Internet Transactions

Goods are selling over the internet at a higher rate than ever, and one of the reasons consumers are drawn to make purchases online is the frequent absence of sales taxes. In an attempt to get their hands on some of that lost revenue, The California legislature has been looking at ways to get more online retailers to collect state sales tax, and they may succeed.

Every year for the last three years, California lawmakers have tried to pass legislation to make it harder for Internet sellers to avoid collecting sales taxes. This year they may be able to pass it.

Lawmakers are touting the fairness of bringing sales tax to internet commerce, but of course they are very interested in the estimated $300 million it could bring in to state coffers in the first year.

California businesses have complained that they cannot compete with online businesses that do not collect California sales tax. Even with better prices from the main street businesses, online retailers that do not collect sales tax can offer what amounts to a nearly ten percent discount.

The most recent bill is based on a similar law in New York that has done well against court challenges. Lawmakers hope to put online and brick-and-mortar businesses on an even playing field.

Some of the bills around the country are called "Amazon bills" because has opposed state sales tax collection measures.

Opponents point out that it would be a huge burden for online retailers to learn the different sales tax rates in thousands of jurisdictions and collect taxes accordingly.

Source: LA Times "California legislation would tighten rules on Internet sales tax" 2/27/2011

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