SACRAMENTO (CBS13) – Did you buy gifts on eBay or Craiglist this holiday season? You could be in for a surprise. There’s a hidden tax to online shopping.
There is good chance it’s a tax you’ve not heard much about. But it’s really quite simple, says Anita Gore with the State Board of Equalization.
“Use Tax is what you owe if you buy something from out of state and don’t pay sales tax on it,” said Gore.
Authors of this tax on the books since 1935 never considered the Internet, but with online shopping and purchases made across state lines, it’s more relevant than ever.
“Because if you, from across the border, can charge a lesser price because you don’t collect the sales tax, then you would encourage consumers to come to you while California businesses would then suffer,” said Gore.
Businesses that have brick and mortar stores in California, and also an online presence, already charge sales tax. Businesses that deal online are expected to register with the Board of Equalization.
Payment for the most part is on the honor system, but California loses $1 billion a year from consumers and businesses that didn’t know, or just didn’t pay.
“If you have your receipts you add up how much you spent, you apply the appropriate sales tax put it in that line, make the payment at the time you pay your income tax,” said Gore.
The best way to know whether a purchase is subject to the use tax is to check your receipt. If you see a sales tax levied for California, you’re safe, but keep your receipt as proof.