California Board of Equalization: Does your website collect sales tax?

Betty Yee, Chairwoman of the California Board of Equalization, yesterday announced that $1.145 billion dollars in sales tax owed by Californians goes unpaid each year!

The actual report is very interesting:

“We now estimate annual revenue losses of $1.145 billion in calendar year 2010[…]. Of the total, $795 million are owed by consumers and $350 million were unpaid by businesses. These revenues are spread among approximately 13.1 million households and 3.4 million businesses. Unpaid sales and use tax liabilities in 2010-11 average $61 per year for each California household and $102 per year for each California business. Revenue from these out-of-state electronic commerce and mail order purchases are a significant component of the sales and use tax gap. (As defined here, the tax gap is the difference between what taxpayers owe and what they voluntarily pay.)”

Chairwoman Yee continued in her announcement

“Use tax is owed when a consumer makes a purchase from an out-of-state retailer who is not required to collect California tax. That means online, catalog, and other out-of-state purchases are not tax-free, as some consumers believe. When the out-of-state retailer does not collect the tax, the consumer is responsible to make the use tax payment directly to the state.[…] With online and catalog sales up for the holiday season, Chairwoman Yee reminds consumers to save receipts, calculate the use tax due, and make the payment to the state.”

A better and easier option for California consumers would be for online and mail-order retailers to simply collect the sales tax that is due at the time of the transaction, just has been done at local retailers for decades.

Does your website collect sales tax for California (or another state)?

If  your answer is “No,” then why not?  When your website ignores the tax obligations of your customers, you are doing them a disservice by subjecting them to potentially significant fines in the event of an audit. Moreover, in some states, if your website actually displays a “Sales Tax” line during checkout with the total tax calculated as “$ 0.00”, the unpaid/uncollected sales tax obligation may shift from your customer to your company!

Now it’s very easy to calculate and collect sales tax!

Now that TaxCloud is available to all online and mail-order merchants your business can calculate accurate local sales tax for every address in the U.S. (including California).  The time has come for all online and mail-order merchants to “flip the switch” and enable TaxCloud within their shopping carts and order management systems.

In less than 20 minutes, your site can be configured to use TaxCloud… and TaxCloud is completely free for all merchants – no strings attached – its simply free!

We are also eager to help if you have any questions.

One Response to California Board of Equalization: Does your website collect sales tax?

  1. FedTax.net says:

    California legislators should seriously consider implementing the Streamlined Sales Tax Agreement which solves all these issues at a federal level. Currently pending legislation (HR5660 – http://www.opencongress.org/bill/111-h5660/show) could accomplish California’s sales tax collection issue. The Supreme Court rulings from 1967(Bellas Hess) and 1992(Quill) anticipated the day when technology would solve this problem and left it to the US Congress to resolve the matter at that time. That time is now.

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