California Anxious To Collect Hundreds Of Millions In Sales Tax Revenue Resulting From Recent Change In Federal Law

The state of California had already undertaken measures of their own to collect more sales tax from online retailers a few months before a recent ruling from the Supreme Court provided states with the authority to do so. 

The California Department of Tax and Fee Administration made contact with more than 2,500 online retailers last fall with letters informing them that they owe the state of California money for sales tax.  This move was part of an ongoing campaign by the state to collect sales tax from all sales made to California residents online that began in 2012 when California struck a deal with Amazon that compelled the online giant to collect sales tax on the state's behalf. 

Tax department director Nic Maduros, while speaking at a Senate committee in April, explained that potential sales tax revenue from the 2,500 businesses contacted represented proceeds in the hundreds of millions of dollars annually and was not money that the state of California could ignore. 

The recent ruling by the United States Supreme Court made this effort by California much easier as now states are given the authority to require online retailers, regardless of physical location, to collect the applicable sales tax. 

The court's decision is hailed as a major victory for many brick and mortar business owners that have long lamented what they saw as an unfair advantage provided to e-commerce sites that were not responsible for collecting sales tax from customers. 

A spokesman for the tax department in California, Paul Cambra, explains that it is too early to know the true impact the Supreme Court ruling will have on the situation but is certain that the state of California will not waiver in its mission to collect all sales tax owed to it.