Photo: Flickr / tom_bullock
On September 15th, Amazon will start collecting sales tax on California purchases. For California residents, that means paying an extra 7.25% – 9.75%, varying based on where we live.And for all you non-Californians laughing at the luck of the Golden State, beware – Amazon will be forced to start collecting in your state very soon.
The retail giant was forced to include tax on Texas purchases this summer and tax on Pennsylvania invoices on September 1st. New Jersey is next up, as Amazon will begin charging sales tax on Jersey residents at the point of sale next year.
Internet sales tax is hotly contested right now in the Senate and House of Representatives, but at the rate Congress passes legislation, it’ll be a while before we see any comprehensive Internet tax reform. It’s a complicated issue – you’re supposed to be paying a use tax to your state government whenever you buy something online, but the impossibilities of enforcing this system let almost everyone get away with a tax-free Internet.
For now, however, Californians are scrambling to place large Amazon purchases before doomsday. Grumbling has already gathered lots of steam, and rightly so – consumers could end up paying hundreds of extra dollars a year, and analysts fear slowing down an online shopping industry that has boomed in post-recession years.
Cyber Monday 2011 showed a 33% sales increase over the year before, and no doubt the retail industry is hoping for a repeat performance this year. Black Friday deals, too, are increasingly available online, driving big shopping from the customers wanting to avoid crowds.
What to do for Amazon lovers? Get creative, of course. Here are our best tips on how to mitigate the sting of Amazon sales tax:
- Use a rewards mall to get rebates on your purchases. Amazon doesn’t offer many commissions on website referrals, but FatWallet has a nice 3% cashback on select Amazon purchases. Combine this with Amazon coupons and you could be saving more than the 7.25% – 9.75% extra on sales tax.
- If you’re addicted to shoes and accessories, skip Amazon and go straight to endless.com, the site Amazon built specifically for these items. FatWallet gives 8% cashback here, so it’s a very solid rebate.
- Skip the Amazon credit card. 3% back on Amazon.com purchases? Please. You can do better….
- Go for the Citi Forward or American Express Blue Cash Preferred. The Citi Forward gives 5% at bookstores, which includes Amazon, and the Amex Blue Cash Preferred gives 6% at grocery stores. Visit your local grocery outlet and pick up an Amazon gift card, purchasing with your Amex, and Amex will credit the 6% to your statement.
Now, if you’re a savvy shopper a bold trick may have crossed your mind. Why not use the Amex Blue Cash Preferred to grab an Amazon gift card at your local grocery store, getting 6% back in the process from Amex, then redeem the Amazon gift card through the FatWallet portal to net another 3% cashback? Or get an Amazon gift card with the Blue Cash Preferred at 6%, then use the gift card at endless.com (going through FatWallet first) and get an extra 8%?
We see no reason why this trick can’t work. There’s no exclusion barring this on FatWallet’s “Cash Back Details” tab of its Amazon page. Per usual, it’s probably not smart to overuse this trick, but let us know in the comments box if it works for you! Happy Amazon discount hunting.
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