Overstock sues New York over Net sales tax law

Overstock.com has filed a lawsuit challenging a New York law that expands the state's requirements for online retailers to collect sales taxes.

The Utah-based company announced Friday that it is asking the court to issue an injunction and declare the law unconstitutional.

In April, Gov. David Paterson signed a new law requiring companies that pay New York-based entities for "directly or indirectly referring customers" to their retail business to collect sales taxes from New York-based customers. The new law goes into effect Sunday. 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.

About two weeks ago, Overstock announced it was cutting ties to its New York-based affiliates because of the new law. The discount online retailer said it told its more than 3,400 affiliates that as of Sunday they would no longer be able to provide advertising for the company.

"I am confident of our position in the suit," said Mark Griffin, Overstock.com general counsel, in a statement. "The applicable United States Supreme Court cases on the question of whether the state can collect taxes under these circumstances make it clear that New York cannot constitutionally require Overstock.com to collect these taxes."

The New York State Department of Taxation and Finance, tax commissioner Robert Menga, and Paterson are named as defendants in the suit filed with the New York State Supreme Court.

Amazon, which filed a similar suit in April, has said it plans to abide by the law and begin collecting New York state sales taxes.

CNET News.com's Anne Broache contributed to this report.

[gsmiller88]

Tax, tax, tax, tax, tax, tax, TAX! I thought we had a little thing knows as the Revolutionary War because of such a thing?

[ferretboy88]

That is how the Democrats work. Tax tax tax. Then use the tax money to give to people on welfare.

[JoeF2]

The Republicans work the same way, just worse...
You may not be old enough to remember, but we had a budget surplus under the last Democratic President. The current Republican President turned that into a rather big deficit...

[Lerianis]

JoeF2 has it right on the head. The Democrats brought this country into a time of surplus, when taxes were actually LOWER than they are right now.
Frankly, I can understand giving some money to people on welfare, because I have had 2 aunts and a very close cousin who had to go on welfare in their lives because of the stupidity of this world.
They tried working, and the cousin I am talking about absolutely REFUSED to go on welfare, sleeping in her battered car, until she got pregnant.... then, she went on welfare and she still works now..... but everytime she manages to make enough money to try and make a start of things, they take her OFF the welfare rolls or try to, making her lose all the money she was trying to save by paying rent for a month or two.... it's a vicious cycle, and it needs to stop.

[plee86]

This is how uninformed no-nothing-idealogues work: post without any facts. FYI, this tax was passed by the Republican New York State Senate by unanimous agreement. But hey, don't let inconvenient things like "facts" and "reality" get in the way of your tiresome diatribe.

[plee86]

Oh and ferretboy88, shouldn't you update your favorite whipping boy from people on welfare to illegal immigrants? You should add that to your computer's spell check just to keep your fearmongering up-to-date.

[wserrano59]

This is not good The government needs to find another way to get money period. Food prices are up 10% and will continue to go up an average of 10% every year. If My salary would go up 10% then I would break even.Gasoline prices are out of control. Driving a car is very expensive.You can't own a house prices through the roof. But they continue to find new ways to fleece the flock.

[Lerianis]

They do need to find another way to make money. I was surprised to read that The Netherlands had a surplus of nearly 500 billion U.S. DOLLARS, because they made savvy investments and taxed corporations and individuals who made over 10 million a year quite heavily.

Prices are up because that is how our system works, the more we want the more we are willing to pay, but there is also that pesky about commodities trading, buy way before it is even made.

[catesd]

ah Capitalism. Can't live with it, can't live without it.

[teisenmenger]

The alternative is to work for the State and the State to own all. Gotta love those socialist paradises - they worked out so well in the last century...

In fact, I would argue that government extending its reach is in large part due to our slow march towards socialism. State-sponsored health care, housing, food assistance ... these all cost money, friend.

[zincmann]

Well I will just have to support retailers that are not charging this tax. When it starts to hit the online retailer in the pocket then they will push harder to get this fixed. Yes I live in NY but I find this unacceptable. So far from what I read its Amazon, Overstock and a few of the major ones, sorry guys but I will have to spend my $$ elsewhere.

[fuzzyCWD]

this is why i buy locally, and from PEOPLE, not ONLINE.

[Benf]

Well fuzzyCWD, I looked for a GPS and wanted to buy it localy, the best price I could find was just a bit over $700.00, I looked on line and found the same device for $468.00, guess which one I bought....oh, and I did pay State Tax on it, they always get their tax, they tax the money they take out of my pay for retirement and then tax the same money again when they give it back to meas my pension and the US Supreme Court upheld this practice, doesnt seem fair huh?

[cbaisa]

taxes aren't inherently bad. taxes being misused and wasted by a government that isn't being held accountable is bad. eventually people will get mad enough about all of the senseless spending of our government and rebel. it's gonna be ugly.

Sorry CBAISA but not in the USA, they just cut cut cut.

Democrats what does that mean, please look at Republican and waste, but that said, this is not about party line but financial problems, I say cut the teachers and fire department, hell lets go less police, its not like the poor need it, they could always go to other places, like say church and pray, haha, so I am all for less taxes until it hurts even the rich, chaos rules.

[blogbum]

Overstock had a lot to say about this in their most recent earnings report. If what they say is true, NYS will be back tracking on this new law. Shame I just placed an order at Amazon and got stuck paying a lot in sales tax.

You can see the entire transcript of their earnings report. Just use the search function to get directly to the part about the NY state sales tax. You can see the link below:

http://seekingalpha.com/article/85766-overstock-com-inc-q2-2008-earnings-call-transcript?source=OSTK

[benjaminstraight]

Worthy challenge. Many people shop online to avoid tax, but then forget that shipping is normally equal to the tax or more.

[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

Retailers have to charge sales tax for in the door sales. Why should online purchases be exempt. This is very unfair. In my state we are supposed to pay sales tax for online, out of state purchases. This is really very easy. I pay it at the end of each year and it never amounts to anything much, but I enjoy the honest feeling it gives me.
jk