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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.
Amazon Sues New York State Over Tax LawNew York Getting Physical With Amazon.comAmazon Says No To New York State Tax Amazon And New York's Battle On Sales TaxTexas Investigating Amazon Over Taxes Cluelesstrain: Bloggers Attack New York TimesSpitzer, Amazon.com At Odds Over Sales TaxCourt Rules Against Amazon In Basis Technology Suit Legal Pitfalls of Employee BloggingSES New York: Convincing Visitors To Buy
Comments
What about overseas sellers?
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 :-)
Hey Dick Blick Art Materials
Hey Dick Blick Art Materials went so far as to establish a physical presence in this state! You pay taxes on their orders now.
Personally, I side with
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.
Got to thinking
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 :)
They're not going after the
They're not going after the affiliates to collect tax. It's for the companies that use the affiliates.
If you don't like taxes, all
If you don't like taxes, all of you should be voting Republican this year!!!
who are they kidding?
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?
NY SALES TAX
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.
Completely Unenforceable
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.
Not possible to enforce.
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.
Contact US Congress now.
It is time to start a campaign to have everyone who reads this post, contact everyone they know and everyone call, fax or write your reps in Washington NOW !
Ask them to respond to NY's non-sense with Federal Law clearly stating that state's cannot impose tax collection duties outside of their own physical boundaries except where the seller has a physical presence in that state AND DEFINE physical presence to exclude individuals who are not on the seller's actual payroll. i.e. affiliate banners etc.
Absent such protections, one state ( NY ) could destroy ecommerce for us all, forcing such business off US soil to avoid this taxation mess. No state has any tax jurisdiction on another nation.
This is already the law based on prior Supreme Court decisions but the states are trying to write their own loop holes to bypass the Court's wise decision.
Being an election year they may actually listen for a change.
Where has everyone been?
I've read and agree with most of the posts in this thread. One thing that puzzles me, is in wondering where all this outrage has been?
NY, and every state in the country have LONG been trying to figure out how to tax online sales - NY is merely the first to try it seriously on it's own. Fact is, the Governors association - and quite likely your governor - have been very quietly lobbying for Congressional support of the so-called "streamlined sales tax" initiative for years.
Our company, Windward Instruments, is a sponsoring member of the ORA (Online Retailing Alliance). It appears that many of the comments on this issue are from other smaller retailers - I would strongly urge all to visit: http://www.retailing.org/new_site/govaffairs/ORA.htm
Have a look - and sign up to support the effort to tell your Congressman, Senators, and your Governor that they have already taken more than our fair share of money - and that perhaps they should ACCOUNT FOR THE MONEY THEY ALREADY HAVE.
Giving government agencies more money is literally like giving a drunk another scotch - they fall down more, and want 2 more free drinks.
Uniform Internet Tax Law
NY state like most of the states, including my home state of Idaho either have already adopted this statute or are in the process of adopting it. NY is the ONLY one to that has modified the law to include affiliates. However, should NY prevail, the model will quickly be ameneded.
In Idaho, the law is enacted in such a way as to define a presence by interent to be by a) an owner living in the state b) a web server physically residing in the state c) delivery by any shipping agent to an address inside the state. If you meet this criteria the business is required to collect sales tax from ALL sales unless the buyer can provide a tax exempt certificate from their home state.
Yes, it is a horrible muddled up government mess. And it is going to get far worse before it gets better.
Go Idaho
The way your state is doing it is the way it should be done. It's legal and constitutional. It's an indirect tax imposed by your state on your resident businesses.
New York seem to be trying to impose taxes on non resident businesses. Yeah I know, they say they are taxing the resident affiliates, but by making nonresident businesses collect the affiliate taxes, they are indeed taxing the nonresident business.
INTENET TAX
NO TAXATION WITHOUT REPRESENTATION!
Sounds like you are for the
Sounds like you are for the terrorists. All hail King George II!
It's Madness!!!!
What if all States decided that they were going to do what NY is unethically propoposing? Those of us who do business online through affiliate programs would be unethically TAXED TO OR HEADS. I back Amazon, Internet Speedway and any such company who will fight against such an unscrupulous move. In a world of competition there is no such thing as a level playing field...be real
I hope this hurts Clinton.
I am still for smaller government. Those liberals can build their big government all they want in their states, but not in mine. Obviously if they are in a cash crunch then they are are doing something wrong. And taking more money from those that are producing and helping the economy isn't the way to help correct a depression.
I love New York, just glad that I don't live there!
It's not the liberals, its greed
It's not the liberals...it is greed on one hand and a bad economy caused by......ta-da ! ....Big Daddy Bush and his $6 trillion dollar war to steal oil for Big Oil Companie Buddies.
The bad economic situation ( Remember Bill Clinton,democrat, left us with a big surplus in the bank ) caused by the Bush Administration, put states and cities in a financial crunch too, forcing them to do stupid things go avoid going down with the ship.
This law is stupid. Many etailers may simply disable NY as an option for selling. This puts no money in NY's banks AND removes more options from NY's citizens.
As a web developer this could also put me under in Florida if I can no longer sell ecommerce web sites. No one can afford to track 50+ jurisdictions and pay them all sales taxes.
I think some stupid politician in NY is trying to destroy ecommerce for all but the very large wealthy companies.
If it were liberals they would be doing something to support the small business instead of squash them in favor of BIG business. No this smacks of a republican type thing. They cut taxes for wealthy and keep us little guys under the tax gun instead.
What about eBay? Have they had any comment yet?
Amazon isn't alone in this.
What about eBay?
What about www.cj.com and the other companies signing up affiliate programs? How will they manage their tracking to know who's affiliate's live in New York and send that info back to the site owners etc.
eBay opposes
Ebay opposes the Streamlined sales tax project. I haven't heard any comments either from eBay about the New York tax collection.
Not yet any way.
Simply put... NY monitor your own taxes!
I don' t think it really matters if a "commissioned affiliate" lives in NY or not. I don't believe anyone who signs up for Amazons affiliate program automatically makes them an Amazon employee... does it?
For those of you with affiliate programs I am sure you (like I) have filled out paperwork indicating your business size (ie # of employees & finacials) I'm willing to bet you never would have thought that an online "affiliate" would be considered one of your employees. With this in mind, I have to agree that this is NY's way of getting there foot in the door for something bigger if they are suscessfull.
I have no affiliates (to my knowledge) in NY so this would not effect me ... yet but I think it's BIG BULL and hopefully it's thrown out.
I support Amazon and am glad they have taken a firm stance, hopefully us "small business's getting riled up over nothing" is a statement to each of our local governments who you can bet are also watching this scenario very closely.
"It's too late when it DOES actually effect you, be proactive and get off that it doesn't effect me soapbox".
I agree with all of your
I agree with all of your statements, but I think you are misinterpreting what the other people have said (me included) about small businesses getting riled up over nothing. Obviously no one wants the state of NY to win. However, I think it is important that small or large businesses that this does NOT affect need to understand that they do not need to cut out New York & lose business if this law doesn't affect them (unless they just want to protest)...or WORSE YET, REGISTER AND START PAYING TAXES TO NEW YORK WHEN THEY DO NOT HAVE TO. People are not getting the point...just read these comments. It is irresponsible not to say anything when so many people are misled, so call it a soap box if you want.
I completely understand what
I completely understand what you said, and are saying. But wanted to stress that just because this may not effect ME, doesn't mean I should sit idly and wait for something else perhaps later that DOES effect me, and the rest of us this currently would not effect.
This, simply put could be the start of a scenario where we give an inch enabling them to later on take a mile. I just think the more who are involved and voicing there distaste for what is going on now, helps prevent other states from thinking maybe they ca take NY's idea and "improve" it, before you know it we're all paying internet taxes to every state etc., etc.
I will admit this may be far fetched, but then again... a year ago I would of laughed at you if you told me NY was going to do this too. I'm all for nipping it in the beginning when it doesn't effect me, my business, or my finances rather then one day wake up and find myself in a position where I am defending my right to conduct business as I have always.
I don't think
I don't think it's farfetched AT ALL. We need to squash this.
Some More thoughts.
Perhaps the simple solution is for Amazon to contract with CJ.com and not manage it's own affiliate program, leaving those affiliate members signing with CJ and not with Amazon.
What if some web site ( Google ) has a link to my site and someone in New York clicks the link and buys from me. Do I have to pay tax to New York. Consider "sponsored ads" on Google. Does Google have to collect and pay the tax because they posted my paid ad? How does New York know?
Will search engines be next, having to track sales as a result of paid ads and collect sales taxes? Is my paid ad on Google any different than Amazon's paid ad ( affiliate banner ) on my site?
What would happen to the internet if this one law was allowed to stand and the other states decide to jump on the band wagon? Will all ecommerc move out of the US and sell only Chinese products online?
This is something the US Congress needs to address soon to prevent yet another economic crash brought about by one greedy, short sighted state legislature.
Amazon Tax, Cut off New York.
Yesterday I sent an email to Jeff Bezos suggesting he temporarily disable the ability of New York residents to purchase on Amazon.com. The thought is to enlist NY Citizens in an outcry against their own government for limiting their online shopping abilities.
This troubles me not just because it is a greedy grab aimed at a particular business ( failes equal protection clause ) but that, because of my business as a web developer, ( http://www.stuffdone.com )this could kill ecommerce for any but the largest businesses in the country. Effectivly that would kill much of my own business and run me into bankruptcy. Small and home based ecommerce would shut down in face of having to manage sales tax for 50 states.
Another point, I am sure NY is like Florida in that if you buy something from out of state you are still legally liable for the sales tax on that item. You are suppose to report the purchase and send the tax to the State. If this is the case, NY already has a law to collect the taxes but are just too lazy to make any effort at all to keep their own citizens honest, favoring the bully approach to try to force someone else to do their work for them. Some one not even in their jurisdiction.
Truth of the matter
This is how I see it. Our economy is doing terrible. The states are out of money. We are at war. Internet retailers, including myself, have benefited from not having to pay taxes for out of state purchases. When in reality our website is the storefront in every city, in every house, and in every business. Sooner or later the government will have to change the rule and work out a simple way to pay taxes to one organization, that will then split the correct taxes up between every state. YES i am saying every state should be collecting taxes. The Internet industry is a BILLION BILLION BILLION $$$ industry and we would notice a immediate spike in revenue. When the government makes more money then our personal taxes decrease. as in the past has shown.
Nancy Pelosi (Speaker of the
Nancy Pelosi (Speaker of the House) has a private gas guzzling jet she does not need...paid for by taxpayer dollars. I know my home state has spent hundreds of thousands of our tax dollars on a tea pot museum (NOT KIDDING). When this kind of crap stops and they have put the money to good use...THEN they can ask me for more tax money if they need it. The wasteful spending is SICKENING. The government does not need more money until they have taken a few tips from Wal-Mart. Not that Wal-Mart is perfect by any means...but have you seen their corporate offices? The executives are basically using lawn furniture in their offices. They know how to stretch a buck. Our politicians, who are elected public SERVANTS should be ASHAMED. I am disgusted by most all of them.
You are insane.
You are insane.
New York Taxes
It seems to me that this new law is unenforceable. Can you imagine the man-hours it would take to moniter all the internet sales to buyers in New York? WOW!
taxes
“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.”
I can see the banner being ready for website postings across the internet.
“New York
This tax law is not a means by which to enact fair taxation; rather a strong-arm tactic to collect desperately needed revenue. TheNew York
If I live and operate an online retail company inNew Jersey New York New York New Jersey
Here, Here
You are right on. And if they get this taxation to fly they are still going to be hunting for more money. It never ends. They will never be satisfied.
I wish I could run my company without a budget and never have to suffer the consequences.
Further, Don't they realize that every nation that has tried to collect and redisturbute wealth, (i.e. socialism and communism) has failed?
More info please!!
I appreciate the article posted as a warning about the new tax law in New York and Amazon's suit.
However, I would appreciate it even more if the author or the editors would post a follow up article explaining this law in more detail. The New York Tax Web site is very confusing on the matter.
For example, how would they implement such a law, especially for small vendors?
Does the law cover "soft goods", those which have no tangible nature (such as independent software downloads, e-books, MP3 music file sales, subscriptions to newsletters, even Tarot card and psychic readings over the phone or the Internet?)
Does the law cover services of an intangible nature, such as marketing services, press release and other writing services, web design services and so on?
The article and the New York Tax Web site don't define the scope of the new law.
Even the problem with affiliates is vague and unexplained. Many affiliate programs allow a vendor to accept an affiliate based on their Web site, not their location. How would one know without researching them in "Who Is" to see if they are based in New York? Shouldn't the affiliates be required to submit this information, and shouldn't the affiliate be the one responsible for doing the business in New York? If I understand it correctly, the law would require the affiliate to register, and the vendor to register, and then both would have to pay a state tax. This would amount to double jeopardy, wouldn't it?
I don't see how the State of New York can implement this law except to a chosen few (such as Amazon) because they would spend all their time (and revenue) trying to catch those whom they feel should be taxed, and thus would make no money in the end, in fact it would cost them more than they would make.
It does seem very much like taxation without representation. If the vendor must collect and pay sales tax to the state, should not the vendor be able to vote in that state's elections, since the vendor is contributing to the welfare of the state? Taxes pay for a lot of services, which an out of state vendor would not be able to use, upkeep of roads, emergency services, schools, etc. Shouldn't such a vendor be given a "discount" since the vendor can never avail of the benefit from the taxes?
Perhaps I don't understand this issue clearly enough, but it seems very confusing.
A follow up article explaining all this (assuming someone, somewhere has a plan and a set of rules) would be very helpful to readers of this newsletter. Please do follow up on this.
Thanks
Affiliate Programs
A lot of people are saying, 'Oh, it's only on affiliates in New York.'
But that's how business is done online, people. 'Affiliates' means 'Advertisers.' People that advertise for you on THEIR website.
Now you the business are supposed to keep track of where affiliates live and pay New York, even if both you and your customer live in, say, Florida.
That is RIDICULOUS. If the State of New York wants to tax its citizens, fine, tax them. But don't come to me and ask me to tax them for you. That's way too close to taxing me directly.
I WILL continue to do business in NY... and I'll pay. But chances are that I'll have a lot more affiliates in other states than I will in NY, simply because of the economics of it.
That one international guy is right--this doesn't affect international websites at all. New York can't tax them, can't request their records, and had BETTER NOT try to block them. It only downgrades the competitiveness of the U.S. based companies, and prevents U.S. based people from turning a profit. Especially in NY.
Who collects tax?
New York is responsible for collecting it's own taxes from the associates not Amazon. If the associates are based in New York and are required to pay taxes to the state of New York, then New York needs to be bothering them not Amazon.
People remember, If you are taxed by a govenment that has no governing presence over you, that is 'Taxation Without Representation'. In other words in order for New York to be able to tax you, You would basically have to be a resident of the state of New York. (That's a little tough to be when you live or your business resides in another state.)
New York the dumb has been gangster
N.Y. Gangsta
Go Amazon!
I realize we need taxes, but I don't waste my money, why should they?
F.Y.I. I'm being audited because of an accountant who pushed the limits. Ugh. They're trying to disclaim every single deduction for business purposes and I have my own business. Our government needs a huge overhaul!
ny tax
This is easy to fix. I'll just not to sell to NY......
IT IS NOT THAT ALL NYC SALES
IT IS NOT THAT ALL NYC SALES will be taxable. This article was written for shock value and it worked!
If you read the other article, is it different than the way it comes off. Businesses are liable for taxinv only if they have an affiliate or employee in NYC. Basically, people will have to re-org their affiliate programs and call it freelance sales, or something other than am affiliate to get out of it.
At the end of the day, it still sucks, and it will make it more difficult to run a stinking small business. As if we do not have enough to worry about! Jackholes!!!
NOT NYC. New York State --
NOT NYC. New York State -- All of the state.
Thank you! This is
Thank you! This is confirming some of the things I have posted below. I think this was a really crummy, misleading article. I think the writer of the article needs to clarify what he has written. He is causing harm to people who are planning to alter their business plans because they think that this tax will apply to every single business that ships to NY.
NY tax
If Amazon pays tax for a sale in there state they have brick moter in, than why not pay in the other states they sell in. I'm in wholsale sales with 5 states and hundreds of cities in our sales area. We have brick and moter in only one state. We have to pay taxes to all the states, also all the different city sales taxes. A bookepers night mare. Why should we pay and not our internet compition! We also have our coustomers using our website. Better yet make it fair "FLAT TAX" with no corperate, farm and churchs exemptions.
Why are you paying taxes in
Why are you paying taxes in states other than your own? Doesn't sound right to me.
I sell toilets and furnaces
I sell toilets and furnaces in ND, SD, MN, IA,&NB with stores near the borders. There are more people in NYC than all 5 states combined, that why we have a accounts in others states. I sell for a $1.05, or $1.055, they sell for $1.00. We both send UPS. Just not fare any way you look at it. If we have to pay a tax let's all pay the same. The dividing up process is really fun. Not to forget the extra stamps, paper and time.
You mentioned that you sell
You mentioned that you sell wholesale. I'm a retailer (in only one state) that buys products from wholesalers all over the country. They have never had to collect any tax from me as long as they have a copy of my resale license. I guess I'm not understanding how it could be that you need to pay all those taxes. I'm sure you've checked with an accountant and obviously know your situation better than I would.
Ouch!
Perhaps small retailers can find a way to block New York IP addresses from their sites?
Talk about an ill-conceived idea....
Do you have an affiliate
Do you have an affiliate advertising program with affiliates in New York? An office or store in New York? If not, then you do not need to collect NY Sales Tax. This article is very misleading.
It DOESN'T MATTER it's a flawed principal
It doesn't matter if you have an affiliate program or not. The idea that you have to pay taxes just because you have one is flawed. The state should abide by the supreme court's decision that if you don't have employees or brick and mortar presence in NY you shouldn't have to collect taxes for the state. That is their job to do for their citizens--it's New York's job and they already do try to collect those taxes. Why mess it up and say if you have an affiliate program you have to collect it now?
A lot of companies use affiliate programs right now. It's an advertising model. What if NY said if you show ads on the TV in New York you have to collect sales tax? Would that be fair as well????
I'm not saying it's fair to
I'm not saying it's fair to people with affiliate programs..and it is probably the door opening to something much, much worse for all of us. The idea that an affiliate is a "presence in the state' is a wild strech of the imagination. I wholeheartedly agree that it's wrong and needs to be STOPPED. But the people who are rushing around trying to figure out how to pay taxes to New York by the first of June need to know that this may not apply to them...don't ya think???
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