A Taxing Situation

If you live in California, hopefully you are aware that this is the last day you can do “tax free” shopping with Amazon. Starting Saturday, Amazon will collect sales tax for purchases from California (it is unclear what Amazon is doing regarding Marketplace Sellers — they haven’t sent us any mail one way or t’other). As a result, there have been article after article on the subject, including one from Bargain Babe extolling readers to buy their big ticket things now!

Perhaps they should consult an accountant. All that is changing is who collects and submits the tax. You’ve always owed tax on online purchases in California. If the retailer didn’t collect it, it was called a “use tax” and was to be submitted with your annual state tax return. Although they didn’t really enforce it before, they started enforcing use tax last year; I know my accountant had me get a summary of our purchases from Amazon and calculate the tax.

With this change, you don’t have to do the calculation. Amazon will do it for you and add it on to the purchase. But the tax was always due, so you are only “saving” money if you were cheating the state out of their tax before.

So what will the tax get you? Quite likely, faster delivery. Amazon decided to collect the tax because California is a big market for them, and this permits them to have huge warehouses built outside L.A. and other locations around the state. This will help cut the shipping time by a day or more – another death blow to brick-and-mortar competitors. Some locations may even get same day delivery.

Music: The Sherman Brothers Songbook (Disneyland Children’s Chorus): It’s a Small World