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7 comments | Friday, July 3rd
New York Goes Gangsta With Tax Law
By Mike Sachoff - Tue, 05/06/2008 - 09:30
Makes sellers offer they can't refuse
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.
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7 comments | Friday, July 3rd
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113 Comments
Cooperation
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What about Australian clotheslines sellers
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.
thanks
Nice Job Please Keep that Up
Thanks For you
New York should Secede from the Union!
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!
No way to track
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’s a money loser…
thanks for your article.
thanks for your article. Very help me. I will more like visit to webpronews site. :) Fantastic
Online Sales Tax
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”.
lol
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
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!!!
Republicans
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.
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.
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