Previously Exempted Online Retailers Now Required to Charge California Sales Tax

SACRAMENTO -- Starting Monday, Californians will be paying more sales tax.

Not only are 51 cities, including Sacramento, West Sacramento and Roseville, raising their sales taxes, but now California is charging a sales tax on nearly all online sales as well.

At Old Soul at 40 Acres in Oak Park, Stephanie Johnson told FOX40 she buys almost everything on Amazon or other online sites.

"Yeah, I think probably with the exception of going to Target," she said.

But now she’ll be paying sales tax for some of those online purchases, just like when she shops at Target.

The California Department of Tax and Fee Administration is requiring online vendors to register and start collecting the state’s 7.25% sales tax.

It comes after a U.S. Supreme Court ruling last year requiring out-of-state businesses that make more than 200 transactions or $100,000 in California sales to collect state taxes from shoppers.

Some experts estimate it will help generate $500 million more a year in tax revenue.

However, it could come at a cost for small businesses, especially those that use Amazon to sell and ship their products.

"There’s a group of people that have been sending goods to California warehouses owned by Amazon. Those folks have created nexus by their shipping into the state to Amazon. Those people have ... they're open-ended," said Sacramento tax attorney Rex Halverson.

He says new state Assembly Bill 147, which is designed to protect small businesses, does not address those that use Amazon’s warehouse network.

"They’re going to have to look back five or six years," he said. "In my opinion, the taxes, interests and penalties are going to put many of them under."

Johnson believes Amazon should help those vendors pay their back taxes.

"If other businesses are paying sales tax, I don’t see why Amazon shouldn’t," the online shopper said.

According to a legislative analysis, the money collected from the online sales tax will go to both transportation costs and public safety personnel.

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