CA loses cash when residents shop online

December 26, 2008 6:47:03 PM PST
There was healthy foot traffic Friday outside the stores in San Francisco's Union Square, but a lot of the shoppers only had to walk as far as their computer to buy some of their holiday presents.

"I would say about 40 percent of the things I bought, I bought online," shopper Karin Buckley.

While more consumers turn to the Internet and Amazon.com is reporting a banner season, not everyone in California is paying the required sales tax on items purchased online or by catalogue from out-of-state retailers.

"Seems like sometimes I do and sometimes I don't, don't pay too much attention," online shopper Susan Mazique said.

Apparently a lot of Californians get the added online discount by not paying the sales tax. California, which needs every penny it can get, figures it loses $1.1 billion each year.

"That money would go to the general fund, it would go to local governments and it would pay for things like transportation, public safety, roads, health care," Board of Equalization spokesperson Anita Gore said.

The Board of Equalization is in charge of collecting that money, officially called a "use tax."

Out-of-state retailers that operate in California are supposed to automatically collect the tax when California residents order online.

But a slew of non-California businesses do not make shoppers pay.

The law says shoppers are supposed to pay the use tax when they file their state return, but it is all on the honor system ans there is little California can do to find out what people owe.

And the state, which is quickly running out of money, can only hope shoppers follow the law.

"Well, with more and more people using the Internet to make purchases, there will be an increase in people who owe the use tax," Gore said.

That means the possibility that California will lose out on even more desperately needed cash.


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