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Call Kurtis Investigates: Taxed On Amazon Prime Membership, But Not Costco?

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.

What is Taxed and What Isn't?
Dining In?
Taxed
Cold Food To-Go?
Not taxed
Cold Food To-Go?
Taxed
Pet Food?
Taxed
Food for Livestock?
Not Taxed
Iced Tea, Gatorade or Juice?
Not Taxed
Iced Tea, Gatorade or Juice?
Taxed
16-ice-cream-question
Not taxed
Ice Cream To-Go with Hot Fudge?
Costco Gold Membership: $60?
20-costco-question
Not Taxed
Costco Executive Membership: $120?
Taxed
Gym, Country Club Membership?
Not Taxed
ver-the-Counter Medicine?
Taxed
Prescriptions?
Not Taxed
Booze to Drink?
Taxed
Cooking Wine?
Not Taxed
CA Redemption Value?
Taxed
Store Bag Fees?
Not 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:

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