Online shopping has become as common as buying gifts from brick and mortar stores during the holiday season. Did you know that law now requires you pay sales tax on every online purchase?
In July, Governor Jerry Brown signed the Marketplace Fairness Act, which requires online retailers to collect sales tax just like physical stores. Unfortunately, not every website collects sales tax.
In order to cover yourself and to prevent getting audited, it’s important to save your receipts. Even if sales tax isn’t collected, that doesn’t mean it’s not owed. For example, Amazon.com won’t start collecting sales tax until September 2012.
Here are some tips straight from Sacramento to help you:
- Before you make your purchase, check to see if you’re being charged sales tax. If you are, then you don’t need to take any other steps. But if you’re not, move on to step two…
- Keep your receipt. If it’s emailed to you, create a special folder in your inbox just for receipts. You can also copy and paste the receipt into a document and save it, or print it out.
- Calculate the tax rate. Sales tax in South Pasadena is 8.75%. Multiply your total purchase by .0875, and you’ll get the total amount you owe.
- Download and print the “Use Tax Return” form from the Board of Equalization web site. There will be space for six items you purchased online. Fill out the form and then…
- Pay your taxes. It seems like a lot of work and can be a drag, but at least it’s protecting you from the possibility of fines or penalties. And, look at the bright side: sales tax goes into South Pasadena's General Fund, which funds local services like the library, parks and street cleaning.
If you’re confused, call the Board of Equalization 1-800-400-7115