Sales Tax for Amazon Purchases Begins in 2 Weeks

The online retailer will levy state tax on mail-order purchases beginning Sept. 15. Depending on where you live, that could add more than seven percent to the cost of each purchase.

If you've got items sitting in your Amazon shopping cart that you've not yet purchased, you might want to consider moving into the checkout line.

In a little less than two weeks—September 15 to be exact—Amazon will begin charging sales tax on purchases for California residents.

Up to now, buying online at Amazon.com saved customers money; no sales tax was collected.

But state lawmakers in California—a state which desperately needs cash—reached an agreement last year with online retailers, including Amazon, who agreed to begin collecting a sales tax in September. Those sale tax funds will be returned to the state.

According to the LA Times, about half of the projected $316 million raised in the first full year—and put into state coffers—is expected to come from merchandise sold by Amazon.

The agreement between Amazon and California may not last long. The Orange County Register reports that the agreement between the two parties was primarily a compromise meant to get a year's reprieve in collecting the tax in exchange for promises to add jobs and distribution centers in California.

Increased prices for online purchases is welcome relief for brick-and-mortar stores, who feel the playing field for customers will be a bit more level.

CNNMoney says Amazon already charges sales tax in six states: Kansas, Kentucky, New York, North Dakota, Texas and Washington. Pennsylvania will join California in sales tax charges in September. New Jersey, Virginia, Indiana, Nevada, Tennessee and South Carolina are all expected to collect state sales taxes from online retailers within the next few years, adding millions to state accounts.

States estimate they lose $23 billion in annual sales taxes, some $11.5 billion of it from online purchases, according to the National Conference of State Legislatures.

Meanwhile, Seattle-based Amazon has been expanding its physical presence in California, according to the SF Chronicle. The Chronicle says that in June, it leased 83,000 square feet just south of San Francisco's Financial District.

And in Sunnyvale, according to the Chronicle, "Amazon is reportedly close to signing up for close to 600,000 square feet at the partially completed Moffett Towers complex to house its Lab 126 subsidiary, currently in Cupertino. The lab is where the Kindle and other "easy-to-use, highly integrated consumer products" (including an Amazon smartphone) are being developed."

Amazon is also expected to open two California fulfillment centers that will employ at least 1,000 workers each in San Bernardino and Patterson.

If you're interested in applying for those jobs, Amazon has set up a website to receive applications.

Fran Wincek September 04, 2012 at 02:47 PM
This is finally happening and I think it's great. Our state needs the money and Amazon has been taking business from brick/mortor stores for years because they are, right out of the box, 7, 8, and 9% cheaper. I know...I have bought a lot on Amazon. And I still will shop at Amazon but happy to see the competition leveled out a bit and the benefit to our community in fair taxes paid.
Rachael September 04, 2012 at 03:08 PM
I'm glad we no longer have to rely on our fellow citizens to report their sales and use tax every April. Seems as though they always forgot to acknowledge those pesky online purchases. Oops!
Carla C September 04, 2012 at 04:24 PM
I work for a small business and am worried how this will work. Will we have to register/start business in each state and then file monthly filings? In some states, you have to file even if it is $0 or you are penalized.
AR September 04, 2012 at 04:36 PM
amazon is making tax concessions with numerous state govts. it is rumored that this is a pretext to an upcoming major change in their business plan - same day delivery in most major metros, supported by a new network of distribution centers. if they pull this off, they will kill off 75% of traditional commodity retail. order it at 10am, have it at 2pm...unless a retailer offers some special level of service or unique product that cannot be ordered from amazon, i don't see how they will survive long term. this is why i continue to favor restaurants for downtown. restaurants will be here in ten years, traditional retail probably won't.
Ethan Bearman September 04, 2012 at 04:48 PM
Bought something from Amazon yesterday. They are already collecting CA sales tax...
Frank Geefay September 04, 2012 at 04:50 PM
This is just the inevitable. The only certainties in life are death and taxes. This was inevitable. Buying tax free out of state goods on the internet was too good to last. Perhaps you were supposed to report these purchase on you tax return but who does that? When will eBay and other online sales companies join Amazon? Once taxes start there is no turning back. Even when the economy is thriving they will still be there. At least I can tell my grandchildren that at one period in history there was a tax haven on the internet.
Dave Colby (Editor) September 04, 2012 at 05:13 PM
Ethan, that's very interesting, because the agreement the state had with Amazon was to begin September 15th.
Jim September 04, 2012 at 05:35 PM
It'll be great for Patterson if they open shop there.
Jesse Ducker September 04, 2012 at 07:27 PM
Well, as an Amazon shopper I'm not thrilled about this. But as a responsible citizen I understand. Ah well, time to get that last couple of tax-free orders in...
Allen King September 04, 2012 at 08:29 PM
Amazon purchases were never tax free. As responsible citizens, we were expected to pay "use tax" on the Internet purchases. Of course, most did not. This is move will be inject some life into local small retailers. With sales tax at source, people can just run to a local shop and buy. A few dollar price difference is not likely to be worth waiting several days for the goods to arrive in mail.
Irene Aida Garza-Ortiz September 05, 2012 at 03:06 AM
I don't think anyone should be surprised as to what else is going to be taxed.
Jill Birmingham September 05, 2012 at 03:30 AM
If your lovely state/local/county administrators weren't asleep at the wheel, they'd be enforcing sales taxes at your local Starbucks, Peets and other coffee shops. They are supposed to be charging tax if the item is consumed on premise. I will save 8.375% every morning for as long as I can...
Chris Zhang September 05, 2012 at 04:35 AM
There is no dispute that closing the tax loophole for online retailers is a step towards more tax equality among real and virtual merchants. But state officials should also think about why some people try so hard to avoid the tax. If California had a lower sales tax, people would have less of an incentive to shop out of the state, and our local retailers would not have suffered so hard for so long from the internet sales.
AR September 05, 2012 at 04:56 AM
the avoidance of a sales tax is a minor part of amazon's success. i can purchase almost any commodity product available for sale in the US from my bedroom and have it shipped to my house free in two days (i am a amazon prime member). for comparison, if you were to leave the house to purchase the same product from a local merchant, i would have my delivery receipt before you started your car. and that hour you spend in transit you can never get back. and even if you shop at walmart, you will almost certainly pay a higher base price (i.e. regardless of tax) when amazon achieves same-day shipping to coincide with its locker system (storage units at convenience stores and other local merchants where you can have items delivered), there will be almost no reason whatsoever to leave the house to purchase most commodity items. the tax issue was a deal-maker/breaker ten years ago when local merchants still had meaningful advantages over then-immature ecommerce systems. in five to ten years, most of these merchants will be gone. ask Borders.
Anne Ernst (Editor) September 05, 2012 at 05:38 AM
When I shop, I try first to buy from a local independent business, even if it's a little bit higher priced (because I figure it goes right back to the community then, not into some rich pocket). But it's all negotiable. I'd rather give my money to someone who is supporting local, American-built product, but you can't always know that detail. I'm pro-Mom&Pop, but pro-need-to-know, too.
Mayra Flores de Marcotte September 05, 2012 at 08:22 AM
I agree Anne. I try to shop local as often as I can. I rather spend a little more knowing that it will return to the community I work/live/play in. My family prefers mom and pop restaurants/eateries to chains and strives to shop equally at locally-owned boutiques and retail as well as convenient stores like Target. That said, I also shop online since living in Silicon Valley is not cheap. In my opinion, it's a matter of balance. Paying taxes on Amazon is just another reason for me to "shop around."
Adam D. September 05, 2012 at 03:49 PM
Yeah I am sure you are reporting these line item purchases on your taxes huh Rachael.
Ann Krueger Spivack September 05, 2012 at 04:34 PM
Anne's comment hits it right on the nail. I always, always order from mom and pop bookstores (such as BookSmart in Morgan Hill) because those people employ right here where I live and pay local taxes right here where I live. Look at the many, many independent bookstores that've gone out of biz since Amazon began. Where are those people that used to be employed by those many small businesses?
Watzon McWats September 05, 2012 at 08:13 PM
Buy local and from our fellow small town neighbors in the Monterey Bay. We need all the help we can get. I avoid driving over the hill and shopping online as much as I can, unless the deal is just too good to pass up or what I want is going to be too hard to get here. That translates to about 5 or less online and over-the-hill transactions a year. Once you get to know the stores and where to get things, it's not that hard. So many people in Santa Cruz and Monterey counties just give up right off the bat and do all of their shopping online or in San Jose. There's just about nothing that you can get in San Jose that you can't get in Santa Cruz, Watsonville, Salinas, Marina, or even Gilroy (not in our coastal counties, but hey, it's another nearby small town - I'll go there before I go to San Jose). The problem with our counties economically is that it's expensive to live here, we have very few real jobs, and then everyone who does have a little bit of extra dough turns right around and spends it over the hill or on the internet - further degrading our financial well being. Buy local and help keep your neighbors employed, stressful, healthy, out of foreclosure, etc. We can help each other simply by keeping our money close to home.
Robin Egbert September 06, 2012 at 02:44 PM
The problem with a lot of Santa Cruz people they are always trying to romantically preach to the masses to their superior way of life. Listen to the elitism... "I avoid driving over the hill." For folks who commute daily and speed over Hwy 17 it is an adenaline rush better than a Starbucks grande. It's no secret that the good jobs are "over the hill" & shopping too where you can still get clean plastic bags instead of having to bring with you soiled sacks from Trader Joe's. The FYI on business is you have to have something people want at the right price. If you don't you go bye, bye. McWats fails to mention the only cities over in Santa Cruz that are successful are Capitola and Scotts Valley. Santa Cruz people are fearful of Watsonville and Salinas. They are cities where locals don't want to shop. When I go to Twin Lakes Beach in Santa Cruz I bring bread to feed the ducks. When I go to downtown Santa Cruz I bring a roll of quarters to feed the panhandlers and drunks. All are interesting to watch. On sunny days I bring more of each.
Adam D. September 06, 2012 at 03:33 PM
Hi Robin, You are correct - one thing is I doubt anyone in this thread commenting on "It's about time" puts their online purchases on their taxes. Just one more thing to try and make themselves feel superior to other. Might as well let us know you drive a Prius as well. I am happy to say I live in Watsonville and since Capitola opened their Target there is a significant drop in those coming to Watsonville to shop. Target is all we have, that and fruit stands since you can't have a dirty fruit stand soiling the roads of the elitists in Santa Cruz. People think that Amazon is the last online store. Paying for sales tax there just means going to somewhere else and buying your cheaper items there. It will not boost local economies for B&M stores. Plus with coupons and $ off + free shipping it is still cheaper than Target, Toysrus, or other B&M stores that mark up prices. Comparison shopping will still happen with or without sales tax and we will still purchase items from places with the lower price. Bottom line is - I support local stores, but they can't meet every need.
The Real Anon September 06, 2012 at 11:23 PM
Fran, that's ridiculous. Why should CA steal the money transacted between Amazon and residents of California? When you spend $100 on Amazon and CA wants to steal $9 from you, why would you support that? What did CA do to earn 9% of that transaction? BTW that is more than most retailer's profit margin.
The Real Anon September 06, 2012 at 11:25 PM
Its not a loophole. If the company doesn't do business in the state, and the order takes place on Amazon's servers, which are also not located in the state, then why should we be paying tax on it? If bricks and mortar businesses want to compete with Amazon they could try LOWERING THEIR PRICES.
The Real Anon September 06, 2012 at 11:26 PM
Why did Amazon throw its largest customer base under the bus? I am mad as hell and I will not shop at Amazon any more just because of this. So they have lost the $1K+ I spend every year there.
Watzon McWats September 07, 2012 at 12:28 AM
It's not elitism to want to support your community. Working over there is one thing, shipping all your money over there is another. The big cities don't need the help like we do. Shopping over there once in a while is one thing, but plenty of folks I know do the bulk of their shopping in San Jose or online - they won't even give local places a chance because that's what their friends do, what their parents did, etc, etc. I totally understand wanting to save money. At times I'll spend a little more to support local businesses, but I don't expect others to do that. There are times however when you can support local businesses and break even, or even come out on top. Santa Cruzians swearing off Watsonville and Salinas makes no sense now that their crime rates are lower than SC. Big bad Watson and Salas are old news. Folks who do swear off those towns again, do so because that's what their parents did, or what their uninformed friends tell them to do. The reality is that those towns are no more dangerous than SC. Salinas has quite a bit of unique commerce, and up until big expansions in Capitola, Watsonville drew a lot of folks from north and mid county to Home Depot and Target.
Watzon McWats September 07, 2012 at 12:28 AM
Even then, if you just plain ol don't like Watsonville or Salinas, why not shop in Capitola, Marina, Monterey, or even Gilroy? Why not support fellow small towns? Baring commuter traffic or a PGA tournament, the drive from mid county to the Del Monte mall in Monterey takes about the same amount of time as it does drive to San Jose, and it's a much more enjoyable drive. On the way back, pickup some local produce in Moss Landing that's much fresher and much less expensive than what you'll find at a big supermarket. Again, shopping local really isn't all that hard if you just give it a chance. I look at the Monterey Bay as it's neighboring small towns as one large community - our own "bay area" if you will. If you can keep things within the community without any skin off your nose, I say go for it. San Jose has plenty of jobs and plenty of money, down here - not so much.
L.A. Chung September 07, 2012 at 06:26 AM
I'm another one who shops the mom and pop bookstores. I do shop Amazon when I'm in a pinch and it's late at night, but mostly as a convenience, and it's not often.
Bob M September 07, 2012 at 03:06 PM
I for one miss the old "Clean Well Lighted Place for Books" that was in the Oaks Shopping Center. It was a great book store and comfortable for my kids. The small book shops are few and far between these days. I use Amazon only when I cannot find the item locally (books, videos, etc) ,which unfortunately is becoming more common.


More »
Got a question? Something on your mind? Talk to your community, directly.
Note Article
Just a short thought to get the word out quickly about anything in your neighborhood.
Share something with your neighbors.What's on your mind?What's on your mind?Make an announcement, speak your mind, or sell somethingPost something
See more »