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Michael Hiltzik: The tax dodge under the Christmas tree

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This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.

There’s no point pretending that sales taxes don’t figure into a consumer’s decision about where to take his or her custom.

The bigger the item the more important the sales tax rate. On a $25 hardcover, the difference between a purchase in Los Angeles County (9.75%) and Orange County (8.75%) comes to 25 cents. On a $2,000 big-screen TV it’s $20. On a $40,000 car it’s $400.

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As my column for Thursday observes, state officials have only recently come to the realization of how much damage to local businesses is done by the pro-forma sales tax exemption enjoyed by many online retailers, especially Amazon.com. The problem is that the exemption isn’t real -- customers are required by law to forward the equivalent levy to the state, but Amazon, unlike Best Buy or your neighborhood bookstore, isn’t required to collect it.

The solution may be to follow the lead of New York state, which discovered that thousands of Amazon’s ‘associates’ -- websites that funnel customers to the main website, are domiciled in that state. New York officials think that’s enough to force Amazon to start collecting sales tax from New York customers, and so far a state judge has agreed. But more litigation is in store.

The column starts below.

On this glorious day before Christmas, I have a message for all you sales tax scofflaws out there: Pay up. This means you. You, who bought your big-screen TV online from Amazon.com instead of Best Buy and your fleece-lined parka from L.L. Bean instead of Eddie Bauer because Amazon and Bean don’t charge you sales tax and the others do. Guess what? You owe it anyway. Skipping out on the sales tax due on online purchases is the single biggest category of ‘noncompliance’ with California sales tax law, according to the state Board of Equalization, accounting for nearly 30% of all unpaid tax.

Read the whole column.

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