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Friday, May 2, 2008

NY State Law Challenged By Amazon

A new law which recently passed in New York State forcing online retailers to collect sales tax on shipments to state residents is being challenged in court by the largest online retailer, Amazon. Previous legislation forced companies who had a physical presence in the state to collect state sales tax, the new law includes any Web site that is based in the state and that earns a referral fee for sending customers to an online retailer, in other words affiliate sites. So if you are an online retailer with just one affiliate that has a physical presence in the state you are obligated to collect state taxes on any sale originating in that state. Amazon's complaint says this of the law, “It was carefully crafted to increase state tax revenues by forcing Amazon to collect sales and use taxes,” noting that “state officials have described the statute as the ‘Amazon Tax.’ ” This should be interesting, what a precedent ! If the challenge fails we'll be seeing a whole lot more of these laws... NY Times article here.

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