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Amazon v. New York: Challenges State Over Taxes

Wednesday, August 28, 2013

The online retail giant Amazon is preparing to mount a new challenge to a New York State law that requires the company to collect sales taxes.

The Financial Times reports Amazon has hired litigator Ted Olson, and petitioned the US Supreme Court to consider whether internet retailers should be exempt from state taxes.

A New York law enacted in 2008 requires out-of-state internet retailers to collect sales taxes if they have so-called "affiliates" within the state. An affiliate can be another website that guides consumers to websites like Amazon to make purchases.

Amazon did not immediately respond to a request for comment.

In March, New York's highest court upheld the state's ability to tax online purchases.

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Comments [6]

Joseph Ignaceous from Virginia

This taxation protects big businesses and pretends to protect the small store-front shops who are not evolving into the 21st Century without a fight. Think internet stores are killing your business? There is a reason for it. You're being weeded out. It's a natural process. Fortunately you have more choices than to cry foul and kick and scream against progress, which will either swallow you whole eventually or you'll be successful at stalling if you manage to team up with enough under-achievers, taking down everyone with you. I'm really rooting for the first, but either way, we'll get what's coming for us if the best we've learned to do till this point is back-stab each other for a bigger slice of the fiat dollar pie. This is much easier than say... dusting off a few rusty brain cells and training them to try something new by taking advantage of this amazing technology which virtually places every customer in the planet in your storefront. But I do understand progress is a scary thing. Anyone who doubts it needs to ask Galileo's fellow church colleagues.

Dec. 14 2013 03:59 AM
Jeanne from Connecticut

As the owner of a brick and mortar hand and power tool store as well as an on-line business, I can assure you that our profit in our brick and mortar store far exceeds the slim margins we make from our on-line sales. I'm no fan of Amazon or the rest of the Mega Retailers who are all proponents of the MFA legislation. Main street physical retailers have suffered long before the emergence of the internet because of Mega Retailers (Home Depot, Wal-Mart, Target, etc.). Home Depot built store 500 next to our tiny tool store. Just to survive we expanded to the internet, just like many other small businesses which ultimately redefines what a small business is today. Mega retailers are up to their old tricks, but this time its small on-line competitors that are in their cross-hairs. This bill targets the people it professes to protect. Mega retailers already pay taxes because they have a physical presence in all states. This comes as a stark contrast to your average small business.
Just imagine the devastating affect this legislation would have on small business which requires them to collect and pay sales tax (monthly) to 46 different states with 46 different sets of laws, taxes (to include as many as 3 local government taxes combined) and variations of so-called “free software”. Additionally, internet retailers will now be subject to audits from remote states and municipalities where we have no physical presence, no political representation, and no right to vote and be held personally liable and driven to personal bankruptcy for tiny mistakes.

Aug. 29 2013 06:10 PM
Gillian from Long Island, NY

I have a business based in NY but we have customers all over the world. Our NYS customers pay sales tax based on their locality. We offer hand-crafted items online that are not available locally and our clients are willing to pay the shipping costs as well in order to have us fill their needs. We do not compete with bricks and mortar stores, but offer "custom-made items at off the shelf prices."

As a business owner, I would not have a problem collecting a nominal state sales tax from my customers, and leave the local portion to them to settle with their city, county, etc. Right now the NYS portion is usually about half the total tax on a typical item. And it usually is charged on shipping as well.

Bottom line: there isn't always an equivalence between walk-in stores and online merchants and there is room in the world marketplace for both.

Aug. 29 2013 12:09 PM
Jim Polichak from Long Island

On-line shopping does offer the consumer more options but it is not undermining local brick and mortar stores. Every business now has the opportunity to offer its wares world wide. This is not a bad thing!
As to the notion that local businesses' sales are do own because on-line businesses collect sales taxes as they have to remember you on-line competition has to get the product to your state. Your customer just walks in the door. Shipping often cost considerably more than walls tax. If the item is inexpensive sometimes shipping exceeds the price of the items.
Even if a national sales tax is passed for interstate sales within a year or two it will most assuredly be extended to all sales everywhere. When the federal income tax was first proposed some senators wanted to cap it at 10%. The cap was voted down as an invitation to jump the income tax all the way up to the cap.
Also don't expect a national sales tax to go to the states. Nixon tried "revenue sharing" to help the states equally from the federal level. How many of you under 50 have ever heard that term?

Aug. 29 2013 10:53 AM
sanskrit from NYC

I think the time has come for a national sales tax whenever goods are shipped across state lines. The nature of the US tax system makes is virtually impossible for a business to figure out exactly how much tax to charge an individual customer based on where they live. It would be a good compromise and support local businesses by making it less attractive to shop out of state while not overly imposing an accounting burden on online retailers. The fair national tax could be the average of all state sales taxes!

Aug. 29 2013 10:33 AM

I hope Amazon looses this one. Internet sales have undermined the brick and mortar stores, which employ sales people and must collect sales tax.

Aug. 29 2013 08:01 AM

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