Law Offices of Connie Yi, PC - estate planning
Tell Us About Your Case

For the safety of our community, clients and staff, we have suspended all in-person meeting effective March 17, 2020. All consultation meetings will be via Phone or Zoom Video Conferencing. Please contact us at 925-484-0888 or email us directly at [email protected] to schedule the consultation.

Bay Area Estate And Tax Planning Law Firm
Estate Planning
Trust Administration and probate

California sales and use taxes can be tricky for online shoppers

| Sep 8, 2014 | Uncategorized |

When we think of shopping online, we generally think of ourselves as consumers. We lay back on the couch or get comfortable in our ergonomic desk chair and wander through website after website. If we need something, we are confident we will find it; the Internet is our oyster.

If we are just window shopping, we may or may not click “complete my order.” We have a friend who sheds the anxiety of her workday in San Francisco by placing hundreds of dollars’ worth of goods in her “shopping cart” but never clicking “check out” — all from the comfort of her Oakland condominium. In the past year, she has cyber-refurnished her living room and cyber-refurbished her wardrobe without making a single purchase.

Had she bought anything, she would have had to review each receipt to see whether the merchant added sales tax to the purchase and whether the merchant had applied the correct California tax rate.

But, online shoppers need to remember that California will ask for use tax payments in some cases if the merchant does not collect sales tax. So our friend’s tax task would have had a few more steps.

The law changed in 2012, as we noted in our article, “California Sales Tax Collectors to Target Online Merchants.” Before, only Internet merchants with a physical presence in the state had to charge tax on purchases made by California residents. After September 2012, though, the physical presence requirement was expanded to include what amounts to a significant economic presence requirement. Even small businesses based a thousand miles away should be adding sales tax to Californians’ purchases.

No every business knows this, though, so our friend may have felt that she had gotten a good deal by ordering from outside the state. That feeling would not have lasted long, though, when she realized — or we told her — she had to pay a use tax on the merchandise if the goods were not tax-exempt.

These are just a few things that Internet shoppers need to think about. If we put on our seller’s hat, the issues are a little different but just as numerous.

We’ll explain more in our next post.

Source: California State Board of Equalization, “Sales and Use Tax in California,” accessed Sept. 5, 2014

Archives

FindLaw Network

Recent Blog Post

Is estate planning necessary for young people?

Misconceptions exist about the relationship between age and estate planning. Yes, older people may prioritize estate planning for reasons related to advancing age and health concerns. That does not mean only older California residents benefit from the process. Young...

What are the responsibilities of a fiduciary?

Residents of California may want to learn more about the role of the fiduciary and their responsibilities. Because fiduciary duty may be a requirement among certain professions, clients and professionals should know more about what this is. The meaning of fiduciary...

5 factors to consider when choosing a guardian

For parents, one of the biggest reasons they decide to create an estate plan is to ensure their child will be cared for no matter what. It isn’t easy to think about a tragedy where a child may lose both their parents before they turn 18, but parents have to plan for...

View More Blog Posts