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Amazon CEO Jeff Bezos addresses a press conference. The online mega-retailer will start charging California customers sales tax.
In just a few days — September 15, to be exact — Amazon will have to start collecting sales tax from Californians who buy stuff (and boy, does Amazon sell a lot of stuff these days) from the online mega-retailer. Last year, Amazon struck a deal with the state. In exchange for getting the statutory sales-tax deadline extended by a year, the company agreed to drop a ballot-measure battle it was gearing up for; and to create a total of about 35,000 full- and part-time jobs in the state by 2015.
So what does this all ultimately mean? Let's break it down.
Q: I'm buying stuff like crazy from Amazon ahead of the deadline. Am I really getting out of paying sales tax?
A: Legally, no. While the sales-tax deadline was extended, the "use tax" provision of state law wasn't waived. As the L.A. Times points out, taking a very hardline position, you were never technically getting away with skipping the sales tax before this whole thing came to a head last year. If you made purchases through Amazon, you were supposed to calculate the sales tax yourself and send it in. Amazon will now start doing that for you, but you're officially liable for the tax that you should have paid as sales tax on all those flatscreen TVs, tennis rackets, and Kindle Fires you picked up over the course of the past 12 months.
The governor signed legislation today that makes California's spat with Amazon over collecting e-commerce sales-tax go away — for 12 months. That's not exactly how the governor's office spun it, however. It focused on the voter referendum that was avoided, and also on job creation:
“A prolonged, costly ballot battle is a benefit to no one,” Governor Brown said. “This landmark legislation not only levels the playing field between online retailers and California’s brick-and-mortar businesses, it will also create tens of thousands of jobs and inject hundreds of millions of dollars back into critical services like education and public safety in future years. It’s time for Washington to follow our lead and forge a bipartisan national solution.”
So what does this legislation mean, exactly? I'll break it down into bullet points: