Amazon to collect N.Y. sales tax; Overstock drops out

New York's expansive new online sales-tax requirements are drawing mixed responses from major e-tailers that haven't previously collected such fees in the Empire State.

Despite a pending lawsuit challenging the law's constitutionality, Amazon.com has said on its Web site that it still plans to abide by the law and add sales tax to orders shipped to New York when the mandate kicks in June 1.

But online outlet store Overstock.com wants nothing to do with collecting the new tax, according to reports at the Affiliate Tip blog and The New York Times.

A few weeks ago, New York's governor signed a new law that requires any company that pays New York-based entities for "directly or indirectly referring customers" to its retail business to collect sales taxes from New York-based customers. It's an attempt to get around a 1992 U.S. Supreme Court decision in the Quill v. North Dakota case that says retailers aren't required to collect sales taxes from customers who live in states where the businesses don't have a physical presence.

New York's new law directly implicate Amazon, Overstock, and other companies that operate "affiliate" programs, which, in the e-tailers' cases, means they offer commissions to external Web site owners who link to their products and prompt sales. Amazon has hundreds of thousands of such affiliates, although in its court complaint against New York state, the company said it wasn't sure exactly how many were truly located in New York.

Overstock, for its part, is opting to cut off its 3,400 affiliates in New York, telling the Times that it couldn't afford to deal with collecting sales taxes in the state, although it, like Amazon, believes the new policy is unconstitutional. An e-mail from Overstock's affiliate program manager republished by the blog Affiliate Tip characterized the situation as "temporary."

[winstein]

People in New York will just buy from places other than Amazon and thousands of small businesses in New York will be cut off from affiliate advertising revenue.

[celticbrewer]

Yes a company has to track and administer tax collection, but the ones really paying for it are the customer. NY is screwing its own people. I can't imagine the loss of revenue is less than collecting the tax, so Overstock seems to be doing a dumb thing, but I applaud and support them for sticking it to the man!

[surfboy90291]

The fact is none of us likes paying sales tax. Yet we are the first to scream, and often the loudest, when our roads go unpaved, teachers salaries are cut and our trash is left sitting on the side of the road. Sales tax pays for these things. I don't like anymore than anyone else, but I understand why it exists.

[SirRobinOfPennsynvania]

Sales tax do not pay for trash collection. Sales tax do not pay teachers. Roads are not maintained by sales tax. Trash collection comes from water and sewer charges. Schools and thus teachers are paid from property taxes... For your information, I prefer paying 23% sales tax but no income tax. Workers alread pay between 17-35% income tax plus an additional 8% for sales tax. Of the percent we do take home to our families comes property taxes and for NYers in the city local tax. Those who do not mind tax buy from a store. For the rest of us the Internet it a G'd send. There has to be balance.

[Stating]

It's for the chillllll-dren! I expect the Demos running New York will explain that the new tax, like the previous thousands of taxes, are for the chilllllll-dren. When those over-taxed chillll-dren grow up poor and destitute, then more new taxes will be for their chilllllll-dren.

[SirRobinOfPennsynvania]

Amazon should not be forced to collect sales tax especially when another law indicates the tax should not be paid. The law is also confusing. It implies that all NY customers be charged sales tax despite which affiliate reffered them. So is a PA affiliate reffers a NY customer to amazon, and the NY customer makes a purchase, the NY customer is to be charged sales tax. NY is getting greedy. First the congession tax now this.

[Ryuteki]

surfboy - Actually, roads, teachers and trash are, as a general rule, paid by Real Estate taxes - as they should be. Sales Taxes usually go to more general expenses like your town's 4th of July celbration, increasing the number of traffic cops, and raising the salaries of your elected officials.

[kgsbca]

Can someone explain how the constitution's ban on taxes on interstate commerce is not applicable here? I don't understand how states can levy taxes on a transaction between a resident and an out-of-state entity, how is that constitutional?

[kgsbca]

Can someone explain how the constitution's ban on taxes on interstate commerce is not applicable here? I don't understand how states can levy taxes on a transaction between a resident and an out-of-state entity, how is that constitutional?

[nobdoy_knose]

Isn't the real problem here the sales tax itself?

I am a small gov't / fiscal conservative and don't like sales tax anymore than anyone else, but have yet to hear a logical argument why one method of purchasing should be given an advantage over another by being tax-free.

[ewalsh69]

O well, Amazon charging tax then Buy.com will get more of my business. Amazon was only marginally less expensive than other online or brick/mortar businesses. It was the free shipping and no tax that made them the best deal. But since this law targets specific companies I will find others who offer free shipping and (no tax). Sorry Amazon, do like Overstock and I may return.

[aka_tripleB]

It won't only be Amazon charging sales tax, most if not all online retailers will be charging sales tax. So if Buy.com has higher prices, there will be an even larger gap in prices, because higher prices mean higher taxes.

[barryblo]

Switch to buy.com? What is the point. They know have to charge sales tax as well! I don't see any good coming out of this law for anyone! Down with the NY Government! Anti-constitutional bastards!

[kieranmullen]

surfboy90291 - Why is it when it comes to budget cuts you always hear about the schools, yet the schools are a small part of the total budget? Why you ask Because it makes for good news! Support and administration costs are the highest in goverment. When have you ever heard about the goverment laying people off? They don't. No local goverment is efficiently run.

KieranMullen
360oregon.com

[alancny]

Amazing! They wont enforce there own law that requires them to collect sales taxes on Indian reservation gas and cigarette sales which would net them millions of dollars, but they have to make up unconstitutional laws that penalize NY taxpayers. Will the last person out of NY please shut off the lights?

[aka_tripleB]

I have always had to pay the Illinois sales tax when shopping online at any retailer, but at 6.25% it isn't that bad. I can see how New York residents would get mad with sales taxes upto 13.5%. I don't have any problem with New York making a law requiring the collection of sales taxes; however, I do see a problem with the collection of back taxes imposed by the new law. I am certain it's illegal to punish people for past acts under new laws. New York threatening to collect back taxes does make the law invalid.

[average_Joe_Ny]

I guess someone has to pay for the corrupt NY law makers with all there hands in are pockets.after all who had to pay for Eliot Spitzers dealings with prostitutes? the NY taxpayers,thats who!

[dethinc]

people are blind.........most of the money ny collects from tax we never see...they wish to have more money to line their pockets...no politician cares about us..look at clinton, gets a senate seat then goes on tour for president..she still gets a paycheck from ny but does nothing for us...alot of people in ny make up excuses for these people but in the end there is none...The more the state gets the more they want..very simple....We really need to got to albany and get these people out of there soon...I am so sick of paying for these peoples paychecks...Sick of getting lied to...this whole country is getting pushed down into poverty...china imports...dont want out stuff though...aliens from other countries,,hell they get better rights than we do.........PEOPLE NEED TO WAKE UP................................

[repose1983]

"Can someone explain how the constitution's ban on taxes on interstate commerce is not applicable here? "

NY City doesn't recognize the 2nd Amendment, so I guess it makes sense that the state is equally selective in it's reading of the Constitution.

[blogbum]

I still can't get over that this is going on. I just found out that we won't get our sales tax back even if New York does repeal the law! And apparently, by law, we were always supposed to pay tax on items purchased from amazon and elsewhere. There is a really good article about this that includes some recent developments here:

http://seekingalpha.com/article/86766-amazon-overstock-gamble-may-pay-off

[eliot_p]

Someone should give Gov. Patterson a black eye. He won't even see it coming. He's truly an ignorant idiot!!!