Like many states, California is experiencing a significant revenue shortage. In their attempts to find additional funds anywhere they can, legislators have once again picked up an initiative that has already been vetoed once – internet sales tax.
According to an editorial published in the Orange County Register, the California Senate recently voted 23-15 to require online retailers to collect sales tax on purchases made to California residents. However, the author expects Gov. Arnold Schwarzenegger to veto the legislation. He vetoed a similar bill last year.
Currently, California residents are required to remit to the state use tax on online purchases. However, it’s nearly impossible to enforce this rule, meaning few residents actually follow through. The California Board of Equalization estimates that the state misses out on $100 million a year in unremitted use tax.
One major hurdle to the proposal is the Supreme Court decision that holds retailers can’t collect sales tax on purchases unless they have nexus in the state. This becomes troublesome when dealing with retailers like Amazon that do not have a physical presence in most states.
