Samy's Cameras in Los Angeles has felt the effects of online retailing. The sales tax on high-end cameras and electronic items can add up to hundreds of dollars. They say a number of customers would go to their store, scan an item with their smartphones and ask for the online price without tax.
"We would try to match as much as we could. We would cut our margin down to the bare bones just so we can maintain our clients, we can still provide that great customer service that Samy's is known for, but it did scare away a few people that sometimes we just couldn't get that low," said Samy's Cameras employee Scott Golden.
The new state law requires businesses to collect sales tax on Internet purchases, and the taxman is ready. The state Board of Equalization is hiring 100 new auditors, lawyers and other specialists to find tax cheats.
In regards to the sales tax, BOE Chairman Jerome E. Horton said:
"This law is a giant step forward. It will help California collect much needed revenue to support critical public services. California and its businesses will not be held hostage to unfair business practices."
The change is huge for online retailer Amazon. For years it fought any online sales tax. The company struck a deal with California to collect sales tax and is opening facilities in the state and hiring hundreds of people.
Most Californians don't know that if an online retailer doesn't collect the sales tax, you're supposed to pay it on your own when you file your income tax. It's called a use tax and it's been on the books since 1935.