Amazon Fights Back Against NY Online Sales Tax

The New York Times is reporting on Amazon's lawsuit contesting the recently enacted New York state law which requires online retail outlets to collect sales tax on items sold to the state's residents. Amazon disagrees that it should be required to collect such tax without a physical presence in the state. We discussed the 'Amazon Tax' last month. Quoting: "The new law is based on a novel definition of what constitutes a presence in the state: It includes any Web site based in the state that earns a referral fee for sending customers to an online retailer. Amazon has hundreds of thousands of affiliates--from big publishers to tiny blogs--that feature links to its products. It says thousands of those have given an address in New York State, although it does not verify the addresses. The state law says that if even one of those affiliates is in New York, Amazon must collect sales tax on everything sold in the state, even if it is not sold through the affiliate."

I wonder if...

I wonder if Amazon could just refuse to sell items to people in NY state, and additionally drop all affiliates there (or at least stop accepting new affiliates). I'm sure all those affiliates (bit and small) would make some racket to their state legislators if they were cut off.

Of course they'd never go that route, I think. It sure would be fun to watch, though. :P

Re:I wonder if...

I believe the easiest option for Amazon would be to simply drop all affiliates in New York. Refusing to sell to New York is financial suicide for them, but dropping all affiliates wouldn't cause too much grief from the public.

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"Services" are taxable under state laws. That would include e-files served to your Ipod or PC.

As a seller (on ebay and amazon), here is my argument against paying NY Sales Tax:
- I am not a resident of New York.
- Therefore I am not under the jurisdiction o

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Maybe you should start demanding that your tax money be used to benefit you. Got a pothole in your neighborhood, then call NY and require they fix it with the tax money you are paying them.

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Well you've definitely got the French anal retentive thing going for you. Magnifique!

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And PLEASE stop comparing American states to countries: Canada != New York State. The United States are a country, like Canada, France or the Federated States of Micronesia.

While we're more tightly knit than say, the EU, we're also a lot looser than most c

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...A state that is taxing a sale taking place in another state...

That is not the issue. If a NY resident buys something they are subject to NY tax, no matter where they bought it or how it was shipped to them, by truck or by wire. The sale takes place wher

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>>>"The sale takes place wherever the buyer lives."

Close but not wholly accurate. If I buy something in Maryland, where I live, I pay SALES tax. If I drive across the border, buy in PA or DE, and then drive back, I have to pay a USE tax. Two di

In a realted development, Amazon to lose NYers.

Doesn't the antidote to this seem clearer than day on this one? All Amazon has to do is ban publishers with payment addresses in NY... those big enough to care can simply reincorperate in a more tax-friendly state, those small enough not to matter will simply just go away.

The parts that offends me is

Firstly
The question is whether the vendors must collect those taxes on behalf of the state. Generally, only those companies that have a physical presence, such as an office or store, in the state of the purchase are required to collect the taxes.
By have a physical presence in NY, I'm deriving benefits from the state; Amazon without a physical presence in NY receives no state benefits and should not have to work as the states agent withput consideration.
Secondly
Amazon's legal obligations are dependent on the actions of a third party over which it has no contract or control. It would be like the county tax assessor telling your your property taxes will increase 25% on sunny days!
Thirdly
NY is the poster child for it's mishmash of sales tax laws, my understanding is that you can be liable for state, county, and municipal sales taxes in some places of NY, the chief obstruction to a coherrent, unified national state sales tax system is NY

A few thoughts...

Congress needs to act, since this is an interstate issue.

I don't think New York has the authority to do this. But I sure would like to see the supreme Court act.

One problem with sales tax is the complexity of the code. What states need to do is to create an out-of-state seller tax rate, which retailers could voluntarily choose to pay (instead of trying to figure out the specific taxing locale). It might be equal to the highest taxing rate in the state, and would be paid to the state with no locale attached to the revenue sent there. Then the state would divide the revenue up amongst their localities based on some sort of formula (perhaps based on in-state sales, for example, for percentages).

Re:A few thoughts...

And this would scale to global customers, how exactly? Chinese or Swedish or maybe Australian buyers paying average-US-state sales tax on their purchases?

If something like this (the NY solution, or parent's) gets implemented for real, then online vendors will simply move out of the US to the land of the (tax-)free.

It's internet commerce. Any solution needs to be globally viable, or it will be doomed to silliness. This is also why it's going to be darn difficult to solve.

Re:A few thoughts...

Shipping through customs is going to be a lot worse than most sales taxes.

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This is also why it's going to be darn difficult to solve.

Not difficult to solve at all. No taxation on goods sold over the internet. Done. See? Wasn't that easy?

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The state isn't taxing Amazon, though. They're requiring Amazon to collect taxes owed by Amazon's customers on behalf of the state. This is how all point-of-sale-collected sales tax works: its not owed by the retailer, but by the consumer, and collected

US Constitution

Indeed, specifically in the case of the sales tax, import tarriffs:

No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing it's inspection Laws: and the net

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...But I sure would like to see the supreme Court act....

They did, years ago, in the days of mail order. They decided that a seller has to have a physical presence in a given state, before that state can force them to become a tax collector for them. The I

Misleading commentary

The new law is based on a novel definition of what constitutes a presence in the state: It includes any Web site based in the state that earns a referral fee for sending customers to an online retailer.

It's not novel. In Zippo v. Zippo 952 F. Supp. 1119, the Court found Pennsylvania had jurisdiction over Zippo.com, a California-based company, over the fact it engaged in electronic commerce with 3,000 individuals and 7 ISPs located in Pennsylvania. In this case, Amazon is engaged in electronic commerce with numerous companies, via the referral fee, based out of New York--thus New York should have the same jurisdiction rights as Pennsylvania did.

Well what about a deliver tax then?

NY could easily pass delivery tax and make UPS and Fed-ed collect the tax for them.

However much I dislike the taxes, I hate discrimination and government loading the dice and making the playing field slanted. The brick-and-mortar companies in New York are obligated to collect sales tax for NY. That includes you corner diner and the mom-and-pop store selling used books. There was a time when compiling 50 state sales tax codes or even 25000 local county tax codes and making businesses outside complying with these code was technologically impossible. But now that excuse is not valid anymore.

If Amazon does not have to collect the tax, none of the local businesses should have to collect the tax. If the local businesses must, then Amazon must too. It is a question of Government not playing favorites and creating walled gardens. It is not really a question of whether or not the the sales tax is fair or unfair. But I am not sure most people will see the distinction.

Re:The Free Ride is coming to an End

If you want to talk about greed, let's talk about the state legislatures and localities that have an insatiable appetite for raising taxes. That's their solution to every fiscal shortfall. They seem to be unable to grasp the concept of "living within your means". Not satisfied with what they can extract from their own citizens, they want to force out-of-state businesses to do their dirty work for them. As far as I am concerned, they can all go to hell.

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Though I grew up in the U.S., I now live in Finland, where the state actually provides services in exchange for high taxation: excellent public transportation, generous unemployment and retirement, a monthly living allowance to students, free university ed

Re:The Free Ride is coming to an End

How far do you want to take this? Should I have to pay sales tax to my home state if I buy a cookie and bring it across the boarder?

The REAL problem with collecting sales tax for online sales has nothing to do with the customer paying the state. It has EVERYTHING to do with the burden on the retailer. Do you have any idea how big a mess the sales tax system in most places is?
It can very from county to county and even from town to town in the county.
So under your system let me show you how this would work.
Any website that sells anything is going to have to register with not just EVERY STATE but every county and town. Each of them will require that you pay a fee to get your tax number... Oh joy.
Then every quarter you will have to file a few THOUSAND tax reports. One per city, county, and state.
Then you will have to have some way to decide which local gets the tax and what the rate is. Do you tax the shipping address or the billing address?
So what your plan would do is drive every small web store right out of business.
It is unconstitutional for the states to tax interstate commerce.
So your little rant is just that a rant. Do we give to many tax cuts to the very rich and big companies? Yea I think so but this has NOTHING to do with that. In this case the tax break is going right to the consumer aka the little guy.
Under your plan the burden would be on the small companies and the consumer.

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Wow.. you sound like a such a bleeding heart liberal.. oh wait.. this is slashdot. Legally avoiding taxes is stealing.. that takes some balls of come up with. I call bullshit! It's my right to minimize taxes I pay in every legal way. Greed (as you call it)

Re:Time for a VAT?

Um, some of us live in states that don't have sales tax.

And we've got guns.

And we believe we should live free or die.

Just sayin'.

(Actually I have no guns, but I think all my neighbors do...)

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You don't have to keep track of what you bought and claim that at the end of the year, unless you're a non-profit or buying things for business use.

Yes, you do have to keep track of all purchases you made that you didn't pay sales tax on, in particular be