Attention, holiday shoppers: The state Board of Equalization is reminding Californians that they may owe "use tax" on their online or out-of-state purchases.
Generally, use tax is owed when you buy something from a business - a mail order catalog, an online retailer, a TV shopping network - that's located outside California but doesn't charge you tax.
Under a new state law, out-of-state sellers must collect the tax if they make more than $1 million in annual sales to California consumers. But "even under this new law, most major out-of-state online retailers, like L.L. Bean and Overstock.com, are not required to collect sales tax as long as they don't have a presence in California," added Runner.
The new law, which became effective September 15, requires out-of-state sellers to collect tax if they make more than $1 million in annual sales to California consumers and at least $10,000 of those sales come through referrals from California-based affiliates.
The average California family owes about $61 in use tax each year, according to the BOE. Those who don't save their receipts can calculate what they owe based on last year's tax return. For more information: www.boe.ca.gov
The state has required payment of use taxes since 1935, an effort to prevent out-of-state retailers from having a competitive advantage over California-based vendors. According to BOE estimates, the unreported and unpaid use tax costs the state more than $1.1 billion a year.