3 months ago
SACRAMENTO, CA - The bargains at the malls may be enticing, but more and more shoppers are buying online instead.
If the retailer doesn't have a physical presence in California, it doesn't have to charge a sales tax.
Budget-conscious Valerie Hoff really likes that.
"I shop at Amazon.com and Overstock.com all the time. I don't ever go out Christmas shopping anymore!" Hoff said.
But since 1935, state law says if you're consuming the product in California, then you should pay a "use tax" . . . which is equivalent to a sales tax.
"Whether it's over the phone, through a catalog or via the Internet, you owe the 'use tax' if the retailer doesn't collect the sales tax," said Anita Gore with the California Board of Equalization.
There's even a line for it on the state income tax form, line 49.
Hoff said she didn't know about the law. "I didn't. I didn't, actually," she said.
Millions of Californians don't either.
Typically, they pay less than 1 percent of what the state figures they owe. The state estimates it loses more than a billion dollars in use tax revenue each year because either people don't know about it or ignore it.
"These taxes that are collected go to state purposes and affect Californians - roads, public health, public safety, all of those things," said Gore
With the state so broke, the state Legislature approved a bill this year that went after online retailers, but Gov. Schwarzenegger vetoed it.
For now, the average California household owes about $47 dollars a year in unpaid use tax. You could be penalized 10 percent, plus interest, if you get caught.
by Nannette Miranda, News10
News10/KXTV
