Netflix Paid Los Gatos $2.5 Million in Sales Tax in 2009

The Los Gatos Observer reports that Netflix paid $2.5 million in sales tax in 2009.

Internet retail sales tax revenue experienced a 6.8 percent increase. Netflix is the largest internet retailer in Los Gatos and accounts for 30 percent of the town’s sales tax revenue. That’s a cool 2.5 million addition to the town’s budget.

“During this difficult economy, Netflix’s continued success has been instrumental in helping the town mitigate significant declines in other taxable services in town,” said Haruyama. She did add, however, that the town’s reliance on Netflix to balance their budget is of concern to the council.

Comments

[Rob Molecule]

So when they charge me sales tax it's going to California and not New York State? Why am I being taxed by another state?

[Rob Molecule]

Ah, never mind. That's probably just California's taxpayers paying that money.

[Christopher]

now I'm confused the sales tax that I am charged for my netflix membership is it staying in washington state, or is it going to California? can some answer this?

[Nalez]

http://www.boe.ca.gov/pdf/pub109.pdf

Internet Sales
Yours may be among the many businesses taking advantage of changing technology to market products over the Internet. Despite all of the publicity surrounding Internet commerce, one essential fact is often overlooked—there is no general tax exemption for sales made over the Internet. This publication is intended to help you determine if you must pay California’s sales and use taxes on your Internet sales.
Businesses physically located in California
If your business is located in California, your Internet sales of physical products are generally taxable unless they qualify for a specific tax exemption or exclusion (see reverse). For sales tax purposes, Internet sales are treated just like sales you make at retail stores or other outlets, through sales representatives, over the telephone, or by mail order. To obtain a seller’s permit complete and file a BOE-400-SPA, California Seller’s Permit Application for Individuals/Partnerships/ Corporations/Organizations (Regular or Temporary), with the Board of Equalization (BOE).

I see the words, I just do not understand them. So I guess that we are being charged an Internet sales tax from the state of calafornia.

[Ravynfeather]

Sales tax is charged per state to my knowledge; I am from Oregon and don't get charged (nor, I imagine, are people from Illinois). If you do the math and compare with your state tax, I bet it's about the same.

My understanding from talking to Netflix Customer Service is that the DVD's are shipped out from relatively local distribution centers, so the tax applies from where those distribution centers ship out from.

[Tester]

I think the title should be changed. It's the members who have given Los Gatos $2.5 million in sales tax revenue. Netflix is just the conduit through which it's funneled.

Netflix also makes money off of the sales tax they collect. It varies by state, county, etc. but where I live the state allows businesses to keep 1% of the tax that they collect. That 1% amounts to an additional $25,000.00 for Netflix, more if the percentage is higher. Now multiply that by all of the places Netflix collects sales tax and it amounts to a tidy profit.

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