The Internet has wrought many changes in the world. Obviously, communication with people around the globe is much easier and more common. Expressing opinions has become facile as well as finding an audience to listen.
One of the ways in which people used the Internet to save money was to make purchases of clothes, supplies and other materials from retailers in other states, while avoiding local and state sales taxes. The largest of these national retailers is Amazon.
But as Amazon grew, it found that customer satisfaction also depended upon timely deliveries. Now, the behemoth retailer has operations throughout the country, including warehouses in California, which eliminated the avoidance of the sales tax on California residents.
However, there are still many retailers in other states who conduct sales over the Internet and do not impose the state’s “use” or sales tax on California purchasers.
Officially, the buyer was responsible for reporting and paying these taxes, if the seller was not imposing the state tax. Perhaps some extremely honest and ethical people did do that.
But over time, the state believed it was losing tremendous revenues to these sales on which the tax was not applied.
This will stop on April 1. Beginning then, any firm whose sales are greater than $100,000 annually or greater than 200 transactions will be required to collect the California use tax, and that includes the local or county sales taxes, too.
Last week, the California Department of Tax and Fee Administration announced, “… beginning April 1, 2019, out-of-state retailers selling above certain thresholds into California will be required to collect California use taxes on their sales into California [and] … also impact(s) in-state and out-of-state retailers’ obligations to collect and remit district use taxes adopted by California localities.”
The state asserts that the only change imposed by the new regulations is the party who collects and remits the tax payments.
“[The] announcement does not increase or create any tax,” said CDTFA Director Nick Maduros. “Rather, California will now require more out-of-state retailers to collect and remit taxes just as brick-and-mortar retailers have done for decades.”
The application of the use taxes exempts the following transactions:
• Food products for human consumption.
• Animal life, feed for animal life, seeds and plants — the products of which are normally food for human consumption.
• Containers used to collect or store human blood, plasma, blood products, or blood derivatives.
• Prescription medicines sold under specific circumstances.
Also, the admission charges to amusement parks, theaters, sports events, golf courses, etc., as well as finance, securities and bonds are not subject to the tax.