SACRAMENTO (CBS13) – Retired grandparents Dale and Trudy Kayser were surprised when their Amazon membership was taxed $8.17 at renewal time. They wondered if it was a mistake.

“[I] don’t care for it. I don’t like to pay taxes,” said Trudy.

It got the couple wondering if memberships are taxed. They didn’t think Costco taxed their membership.

California has quite the complicated sales tax code, giving Tax Attorney Betty Williams plenty of work.

“There are a lot of rules to pay attention to,” she said.

For example, pet food is taxed, but she says if the food is for livestock like a horse or cow, there is no sales tax. Almost all stores charge sales tax on household goods and clothing, but if you pick up those items up at a charitable thrift shop, there is no sales tax. Drinks like iced tea, Gatorade, or juice aren’t taxed, but if it’s carbonated, you’re taxed.

If you dine in at a restaurant, you’re taxed but if you take it to-go, there’s no tax unless the food is hot. Taking food to-go can get tricky and you have to pay attention to the temperature of your meal.

Williams says, “Cold sandwich, you’re taking it to go, so it looks not taxable, but you ask them to throw hot gravy on top, it just became taxable.”

What about memberships. Taxable or not?

Williams explains if it’s a gym membership, you’re not subject to sales tax, but memberships like Amazon and Costco fall under tangible goods and discounted sales. Williams says if annual store membership are $60 or less, they’re not taxable. Costco’s basic membership is precisely $60 and is not taxed, but Amazon Prime is now $119 a year, therefore, it’s taxed.

Dale says, “I’m OK paying the sales tax if it’s a legal fee in the state.”

But Trudy has a different take: “I don’t care for it,” she said.

If you don’t want to pay sales tax, move to Alaska, Delaware, Montana, New Hampshire, or Oregon where there is zero sales tax.

Links to tax code:

  1. Since Costco only sells to members, it would be subject to tax. Since Amazon sells to non-members, too, I don’t think it should be subject to taxation.

    per BOE: When are charges for membership fees taxable?

    Membership fees that are related to the anticipated retail sale of tangible personal property are subject to sales tax when the retailer sells its products only to members, and the membership fee exceeds a nominal amount, as specified in Regulation 1584, Membership Fees. Membership fees that do not exceed the nominal amount are generally not subject to tax.