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Wednesday, June 19, 2013 | 10:14 a.m.

Posted: 11:18 a.m. Thursday, Nov. 24, 2011

Online purchases cost state billions in unpaid use taxes

KTVU.com and Wires

SACRAMENTO, Calif. —

As the holiday shopping season descended on retail outlets over Thanksgiving weekend, state officials were reminding those who chose to shop online that some purchases may require payment of use tax.

Use tax is equal to the sales tax the consumer would have paid when purchasing a similar item in California, according to the state's Board of Equalization, the publicly elected tax board.

The board estimates that California loses more than $1.1 billion in revenues from unpaid use taxes from consumers and businesses.

 Current law requires consumers to pay the tax if they purchase taxable items from online retailers that do not collect the tax.

"The use tax brings fairness to the marketplace by making sure that online retailers play by the same rules as storefront retails," board member Betty T. Yee said in a statement that week.

Yee said that online retailers could help inform consumers of their legal obligation.

"Online retailers have the closest contact with their consumers, so their help in informing the public could go far toward increasing compliance with the law," she said.

According to the board, many online, out-of-state retailers do not collect the tax, giving them an unfair advantage over those retailers that do.

State legislation passed in 2011 would require many such retailers to collect the tax beginning next year, which the board estimated would increase state revenues.

Until the law takes effect, consumers need to calculate and pay the use tax. Consumers can find more information about the tax on the board's website at boe.ca.gov.

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