Tax controversy: paying online sales taxes in California

As California residents prepare to file their taxes, there is one thing that tax officials are concentrating particularly hard on: sales taxes on items purchased online. Under state law, California residents must pay a "use tax" on any goods purchased online from a retailer that is based outside of the state. However, most Californians do not pay the tax, and that could result in a number of tax controversies with officials.

Of course, part of the problem may simply be that people are unaware of the use tax. In 2010, only $11 million was collected from California residents. However, officials estimate that each year $1.1 billion in use taxes go uncollected.

To increase compliance, the California Board of Equalization has released a "lookup table." The table provides estimates of how much a person should pay in use taxes based on his or her income level. However, the table is just an average, and some people may owe substantially more or less than the provided estimate. Still, it is believed that the chart will almost double compliance and result in $10.6 million in more tax revenue.

In many cases, compliance with the use tax may be very difficult for consumers. That can be especially true for those who make most or all of their purchases online. However, 2011 could also be the last year for which Californians are expected to voluntarily report their online purchases. Starting later this year, online retailers will be required to collect the sales taxes, which currently isn't the case. For now, though, to avoid any tax controversy with state officials, taxpayers may want to fish around for those online receipts.

Source: The Bay Citizen, "California's New Tool to Stop Tax Evasion," Ryan Jacobs, April 5, 2012

No Comments

Leave a comment
Comment Information

Contact the Law Office of Williams & Associates

For more information about our tax law services, or to discuss your tax matter, call our Sacramento office at (916) 488-8501 or toll free at (800) 684-7147. You may also send us an inquiry via email.

Contact the Firm

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Office Location:

3600 American River Drive, Suite 135
Sacramento, CA 95864

Toll Free: 800-684-7147
Phone: 916-488-8501
Fax: 916-488-8196
Sacramento Law Office Map