Sunday, July 10, 2011

California Ships Shipping Business to Arizona

On July 1st, California's new internet tax law went into effect. For Arizona, the net effect is more distribution center jobs.

A new California law that forces out-of-state retailers to collect sales taxes on Internet purchases could have the unintended consequence of chasing businesses and jobs away from that state - and into Arizona.

Real-estate brokers say a number of Internet retailers have bought or leased real estate in the Phoenix area for order-fulfillment and distribution centers, and that California's so-called "Amazon tax" likely would accelerate that activity.

Whether you think it is "fair" or not to avoid collecting state and local sales taxes, consider the online retailer's problem.

Jonathan Johnson, president of Salt Lake City-based Overstock .com, said it made sense not to make remote sellers collect sales taxes and distribute them to states and municipalities because there are about 1,000 or more taxing jurisdictions in the U.S., and they all have their own rules or tax holidays. The whole situation is too complicated for even computer programs to keep track of, he said.

Imagine the staff you would need to keep up with the tax changes in each locality let alone what you have to do just to determine which taxing jurisdiction you are shipping to.

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