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New York Goes Gangsta With Tax Law

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Online retailers doing business in New York will be required to register with the state beginning June 1, 2008 to collect taxes, or face audits for prior quarters for failing to register.

 

 

Amazon.com is suing the New York State Department of Taxation and Finance (DTF) over a new state law that requires Internet retailers to collect sales tax on purchases shipped to state residents.

Amazon has argued that since it does not have a physical presence in the state that it should not be required to collect taxes on shipments going to New York. "Amazon has no physical presence in New York," according to the suit. "It does not own, lease, or otherwise occupy any physical property in the state, and none of its employees works or resides in the state."

In addition Amazon says the New York law is unconstitutional based on a 1992 U.S. Supreme Court ruling that claims states are prohibited from requiring out of state retailers to collect sales tax unless the company has a physical presence in the state.

In the Quill v. North Dakota case, the Supreme Court re-established the rule that a state could not impose sales tax collection on a business unless the company had employees or property in the state.

New York defends the law by arguing that the Amazon Associates program, which allows Web site publishers to receive commissions by promoting Amazon items through their sites make Amazon liable to collect taxes on its behalf for those affiliates who live in New York.

One piece of bright news for Amazon and other online retailers is that the state of New York is not seeking back taxes. Tom Bergin, a spokesman for the state Department of Taxation and Finance told WebProNews,"The legislation provides for a limited amnesty for online sellers who register as sales tax vendors and start collecting taxes by June 1, 2008."

"If the seller registers and starts collecting sales tax by June 1, the seller will not be liable for tax not collected for sales tax quarters prior to June 1. Conversely, if you don’t register and it is later determined that you should have, you could be subject to tax dept audit for quarters prior to June 1."

Brick and mortar companies are generally supportive of the "Amazon Tax," saying it levels the playing field by forcing online retailers to collect state sales tax. The down side is that it could potentially mean fewer sales for online retailers.

The choice between paying $100 for an item or $108 would definitely affect the sales of other online merchants besides Amazon. In an increasingly uncertain economy the consumer cannot afford frivolous spending.

If the New York law is upheld, you can be sure a whole host of other states will follow its example and implement similar laws. The New York law is projected to generate $50 million in revenue this year and $73 million next year–an amount that any cash-strapped state would be happy to collect.

 

 

New York Goes Gangsta With Tax Law


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  • Guest

    This will never stand up to a challenge in federal court. Under standing federal interstate commerce laws, the "Point of Sale" is the only point a state may use to tax determine jusdiction. The point of sale according to federal code is the website that process the order and payment. 

    Therefore, if a person in NY uses a webserver in another state to make purchase, they have "traveled" using the intercsate transportation mode of "telecommunications" to that state to make the purchase, and only that state my apply a tax on "sales". The federal government can of course enact federal "interstate commerce" taxes as they see fit.

  • Tina

     

     

    The fact is, this law will cost NY.  They will need an entire new department to track and attempt to enforce this law.  Think of the man hours they’re going to be spending filing lawsuits in 49 other states….which to my knowledge, is the only way they could retrieve the taxes they think they’ll be entitled to.  NY has no authority to impose any kind of penalties on people or businesses outside their borders, so unless they get the Federal Government to back them up (which is unlikely because of prior Supreme Court precedence), they have no real way (other than suing in the state of whatever business they’re trying to collect from) of actually collecting anything.

    While this doesn’t directly affect me, any unfair, strong-armed tactic that goverment tries to enforce, should concern ALL OF US.  It’s time to take a stand and boot out every "professional politician" and put some local, "real" people in office who could revamp our whole system in a no-nonsense way.  We’ve been electing these same "professional politicians" for decades now and look where we are…. we need RADICAL change.

  • Guest

    Here in Ohio we have a "Use Tax" which is combined within the sales tax. If buy something outside of the state and use it in Ohio, you have to "voluntarily"(at this point in time) pay the tax. If NY sales tax includes a Use Tax, then NY is making Amazon, and others, responsible to collect and pay the tax on behalf of the individual. Therefore NY wins. Assume the position. Open up your wallet and bend over.

  • Rico

    I don’t have an online retail site but if I did I would beaf up my advertising to NY residents and maybe even run a special for NY’ers and make it clear on my website that I would not be complying with NY tax law…LOL.  Just how do they think they are going to enforce this crap when they had no jurisdiction outside of NY….LOL?

  • Guest

    If you don’t like taxes, all of you should be voting Republican this year!!!

    • Guest

      Typical right wind misinformation. As it turns out, total tax burden has gone UP in every Republican administration since Eisenhower, and down in every Democratic one. Likewise, total government spending, the other thing right wing revisionists like to trumpet as a cause celebre, has gone up in every Republican administration, skyrocketing during the 80s under Reagan, and exploding under Bush II. Mean family income and economic standing fell for most American families concurrently, during both the Reagan and BUsh I/II presidencies. The appearances to the contrary were entirely funded by credit, and unrealistic and untenable situation whose chickens have come home to roost. Conversely, spending significantly decreased under Clinton.

      If you are going to be so rabidly dogmatic, it might help to get your facts straight. Oh, but wait, for a Republican, that’s not possible.

  • http://asylum-et.com/ Asylum

    I posted a comment before and now I have got to thinking after reading some of the comments after mine. This is all a bunch of BS. I keep seeing posts saying this would only have effect on businesses who have affiliate programs and get paid for referals and only those businesses would be subject to NY sales tax.

    Ok that is not even possible. Sales tax is a percentage applied to a total when goods are sold. An affiliate program offering referals has nothing to do with sales nor sales tax. An affiliate program is a SERVICE and the affiliate is offering the SERVICE of promoting a business or the like. Money generated like this may in some way be subject to INCOME tax but NOT SALES TAX. To take this one step further the money that is given to an affiliate for a referal is a GIFT and therfore is non taxable income so how about that?

    On that note this article I guess may be a bit missleading but if it is in any way true well NY tax folk obviously have not thought this through very well and look like idiots and can for lack of more appropriate words, piss off!

    Forget those fools and go back to your normal operations and be well all of you :)

    • Guest

      They’re not going after the affiliates to collect tax.  It’s for the companies that use the affiliates.

  • Guest

    Personally, I side with Amazon with the cite of Quill vs. North Dakota. As far as I know, you must maintain a physical presence of business within this state. But as far as whether it goes to NY courts or Federal courts, that I do not know. Good luck Amazon.

  • Guest

    Hey Dick Blick Art Materials went so far as to establish a physical presence in this state! You pay taxes on their orders now.

  • http://www.elenasmodels.com/ LoveOnline

    And what about overseas sellers? They may have affiliates in NY too…

    WOW! Think about all these international trips the tax man will be able to make to get them audited :-)

  • dethinc

    Central Ny resident here…

    To many libs here….

    i hate ny right from the core of my soul….

    We need to march to albany and get our hands dirty here…

    NC is looking really good to me…lol

    What does ny think it will do cross a state line and audit a company in another state..lol..yea i can see trouble coming with that…Ny thinks it is a major goverment op or what…

    If i had a online company i would tell ny ,,whatever..lol

     

  • http://www.eporia.com/ ecommerce

    We have all seen the writing on the wall for a longtime of online retailers becoming responsible for state sales taxes. Even though for the time being NY seems to be a pretty tough case, we can hope that in the near future things will actually become more “streamlined”.

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  • “V” is for Vengeance

    I don’t see this as being enforceable for NY…I knew about this supposed tax more than a year ago…I moved out of that retched state 25 years ago because of the greed and expense of living in the most Liberal state in the union…I rent space on a Web server in the mid west, business is in the southeast, secure shopping cart server is in CO and I use the U.S. Post office for delivery…It will cost NY tens of millions of dollars to enforce and they won’t get near enough revenue to sustain it let alone be able to track people from NY buying things online…This will cost the people of NY big money compared to what they will be bringing in…It

  • Guest

    Enough is Enough! New York is whining about sales tax it has no right to! On top of that they are whining about the money they’re losing! Well, if NY with it’s historical line of corruption started cleaning up their own mess and hired some administrators with honesty and knowledge it would’nt be in the Red like it always is and then expects the citizens to cover their ‘Ass’.

    New York should secede from the Union instead of suing because their past administrative works have been so poor and corrupt.

    Wake up New York, it’s not the citizens using the internet that need to pay for your accounting blunders and corruption, it’s the lame politicians. Give it Up!

    Also, the Brick and Mortar businesses are behind the tax, sure, until they want to have an Internet Presence!!

    Leave it to NY to screw up everything!

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  • http://www.qualityclotheslines.net Australian clotheslines

    What about me. I live in Australia and while most of the clotheslines i sell on my site are sold in Australia, i do sell overseas too. So if i sell one in NY then do i need to pay a tax too? Haha, they wont be getting anything from me.

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