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.
Discount online retailer Overstock.com announced on Thursday that it will be selling its products outside the United States for the first time.
"We're actually right smack dab in the middle of integrating," Jake Bailey, Overstock's director of international sales, said in an interview with CNET News.com on Thursday. No final date has been given for the launch of international sales, but Bailey said it will be before the end of 2008.
The Salt Lake City, Utah-based company has inked a deal with E4X, which runs a service called FiftyOne Global Ecommerce. The partnership has enabled Overstock to start billing and shipping to a total of 34 new countries--Canada, as well as 33 European nations. FiftyOne lets a participating retailer ship to a U.S. address and receive U.S. currency, while the buyer pays in his or her home currency.
Not all of Overstock's products will be able to be shipped overseas. Some bulky products, like massive HDTVs and large pieces of furniture, will continue to be available only in the States. But, Bailey said, "for the most part, it's going to be the bulk of our product offering."
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