As Expected, Amazon Sues New York
Remember the post we wrote about New York taxing online goods that were shipped to the state which got the affectionate name - “The Amazon Tax.” Well, Amazon didn’t take to well to this tax and is now suing New York State claiming this tax is unfair.
Amazon.com is suing New York over a new law that requires out-of-state online companies to collect sales tax from shoppers in New York.
“We are challenging the constitutionality of the recently enacted legislation in New York,” Amazon spokeswoman Patricia Smith said.
Officials estimated the state would gain about $50 million by requiring Internet giants such as Amazon.com to collect state sales tax. New Yorkers are currently on an honor system to report their online spending when they file state tax returns.
The state Legislature and Gov. David Paterson passed the law as part of the 2008-2009 budget. It applies to companies that don’t have a brick-and-mortar presence in New York but have at least one person in the state who works as an online agent — basically someone who links to a Web site and receives commissions for related sales.
The suit argues the change unfairly targets Amazon, is overly broad and vague, and violates the commerce clause of the constitution because it imposes tax-collection obligations on out-of-state entities.
6 Comments, Comment or Trackback
mark
This is still a non-story, imo. Since these goods are already taxed, it’s not a new tax. Their simply asking the shippers to collect the taxes for them. Something that any honest New Yorker should support (as it makes their life easier), any less-honest New Yorker should hate (they’re paying more money), and any company should be upset about because a) it discourages the dishonest customers and b) it may be a slight financial burden for them to organize (but obviously the financial burden is offset by the profits they make by shipping to NY in the first place).
May 3rd, 2008
Rager
Interstate Commerce. Mark, you failed to recognize that states cannot tax goods going across borders. Sales tax still applies to purchases within the state, but anything else is interstate commerce.
May 3rd, 2008
mark
Whether taxing interstate goods is illegal or not is another question. It’s not that aspect of the tax that Amazon is attacking per se (”The suit argues the change unfairly targets Amazon, is overly broad and vague, and violates the commerce clause of the constitution because it [b]imposes tax-collection obligations on out-of-state entities[/b]”). What’s more, the tax, as a tax on interstate goods, already exists (”New Yorkers are currently on an honor system to report their online spending when they file state tax returns”).
It’s the enforcement of it (and the use of them as tax farmers) that they’re not happy about.
May 4th, 2008
Paul B
But since Amazon has no physical presence in the state of New York, the state has no jurisdiction in this matter. They should just worry more about how to penalize people who do not report the purchases. It’s not Amazon’s fault that the people of New York do not follow the law. Amazon has a reason to be upset, because they should not be required to collect taxes for a state in which they do NOT reside.
May 5th, 2008
mark
@Paul B - I agree. That is indeed why I imagine Amazon is upset. Certainly they should be as a major corporation looking only towards the growth of profits. If I was a NYer though, I’d find it difficult to whine about this new law (without feeling like a mini Phil Collins or Celine Dion).
May 5th, 2008
Rager
How is the collection of taxes on interstate commerce even legal at all, then? New York needs to find better ways to improve its budgetary woes, like not locking up non-violent drug offenders with no violent history. That would clear prisons and ease up on their budget in a much more constitutional manner, since New York has no right to tax goods that cross state lines.
May 6th, 2008
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