Many online sellers don't have to collect sales tax
Only 'handful' of firms respond to notice of new California rules
Some media reports have suggested that all online sellers must now collect California sales tax but that's a gross overstatement that creates needless confusion for both taxpayers and consumers, according to the state Board of Equalization.
BOE member George Runner said California's new online sales tax law (AB 155), which became effective last September, requires out-of-state sellers to collect tax if they make more than $1 million in annual sales to California consumers and at least $10,000 of those sales come through referrals from California-based affiliates.
"Even under this new law most major out-of-state online retailers, like L.L. Bean and Overstock.com, are not required to collect sales tax as long as they don't have a presence in California," he said.
Earlier this year the Board of Equalization mailed letters to more than 200 out-of-state retailers notifying them of the new law. To date, only a handful have responded by beginning to collect sales tax, Runner said.
When out-of-state retailers do not collect tax, California consumers are still required to report and pay the equivalent of sales tax, known as "use tax," Runner added.
Consumers can pay directly to the BOE using eReg or pay on their California income tax returns with the option of using BOE's Use Tax Lookup Table.