After days of uncertainty the State Legislature and the online retailer, Amazon, have come to an agreement on whether or not the online giant will have to impose taxes on California shoppers.
The deal struck between the State and Amazon, on Friday Sept. 9, 2011, will result in California shoppers paying a sales tax on the goods they buy from the retailer.
The Internet Tax Freedom Act established in 1998, gave online vendors the ability to determine whether or not to charge sales tax to out of state customers.
Online retailers, in most states, only charge taxes to those who purchase from the state in which the business has a physical presence, whether it be its headquarters or the warehouses they use.
The new bill that was pushed, known as the Compromise Bill, will result in taxes being charged to California shoppers on all the goods they purchase.
For the time being, the bill allows Amazon to wait until September 2012 to start collecting any taxes, giving the retailer and many others, time to lobby Congress and come up with a better solution.
Although the delay in tax collection allows for a different arrangement to be thought out, the year long wait will deprive the state treasury $200 million in tax revenue.
While the State government made the push to collect taxes, Amazon made the effort to avoid it at all costs.
The playing field has been somewhat leveled and smaller businesses will be able to compete more fairly, instead of having to deal with Amazon and its almost tax free shopping experience.
Most online stores now tend to hide or include the cost of taxes in the price of their products, making less of a negative impact to their sales. A year from now the small increase in prices could mean that buyers will be looking for online stores other than Amazon, which might offer a better deal on what they are shopping for.
When asked if the enforcement of collecting taxes would change his shopping experience Joshua Isom, a sophomore, said, “I think I’ll start shopping at eBay a little more now. There is a tax on everything now, on gas, licenses, it’s crazy”
Only time will tell if the soon to be implemented bill will have any negative effects on Amazon sales and purchases and whether or not customers will mind a slight increase to the goods available on the Amazon site.