Tuesday, May 13, 2008
Amazon.com is challenging New York's Internet tax. The claim is that this new statute is unconsitutional. As an article in Media Posts Publication provides:
The Web retailer argues that New York State can't tax it because Amazon has no physical presence in New York or significant ties with the state. "Amazon's only contact with New York residents is by mail, wire, or common carrier," the company argued in a lawsuit filed last month.
The bill, recently signed by Gov. David Paterson, requires Web retailers that use in-state affiliates to collect New York sales tax. The bill was largely seen as targeting Amazon.com, and was informally referred to "the Amazon tax."
The U.S. Supreme Court ruled in 1992 that states cannot require out-of-state retailers like catalog companies to collect sales tax unless they have a physical presence, like a brick-and-mortar store, in those states.
But the New York legislature relied on the theory that Amazon's in-state affiliates--including other Web publishers that garner referral fees because they have placed links to Amazon on their sites--constitute a sufficient presence in New York to justify taxing it. That rationale was first put forward last November by former Gov. Eliot Spitzer. The measure is expected to bring in $50 million to New York this year.
Mitchell H. Rubinstein