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New York court throws out Amazon lawsuit on tax law

updated 04:55 pm EST, Tue January 13, 2009

Amazon tax upheld by state

Amazon's lawsuit against a state of New York law that has online retailers having to collect taxes from residents of a state despite not having a physical office or base in the state has been thrown out of court by a judge on Monday. The law, passed in April and called the Commission-Agent Provision, names any affiliate linking to Amazon or any other online retailer that is responsible for more than $10,000 in sales as a part of Amazon or any online retailer in question and thereby entitles the state to collect taxes on the sales. Now, short of a successful trial in the Court of Appeals, Amazon and other online retailers will be forced to collect and pay taxes from every sale to a New York resident, which could set a likely damaging precedent to online sales.

If Amazon goes on to appeal the decision and is again unsuccessful, its New York-based affiliates who account for more than $10,000 in sales will be on the hook for the taxes. Overstock suspended affiliate accounts based in New York in May because of the law.

Similar laws to the one passed by New York may also be adopted by other states, though none have yet done so. [via TechCrunch]



By Electronista Staff
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  1. davedawgnyc

    Fresh-Faced Recruit

    Joined: Oct 2005

    -2

    Word on the NYC Street...

    Fuuuuuuuuuk!

  1. malax

    Fresh-Faced Recruit

    Joined: Aug 2006

    0

    Good

    It's never been fair to brick and mortar merchants that sales by out-of-state companies are given preferential treatment. Why would I be discouraged from buying something at the local Apple store (or other local retailer) just because I can save $100 or more in sales tax?

  1. Guest

    Fresh-Faced Recruit

    Joined: Nov 1999

    +1

    malax-you idiot

    The reason is that why should a business that pays local and state taxes in the state in which it resides, also pay those taxes elsewhere? Sales taxes are levied by STATES (in case you haven't noticed - there is no federal sales tax) - and why should one state have the right to levy a tax on a business that doesn't even exist in their state. Just because the person who makes the purchase happens to live there? It's completely ridiculous.

  1. TheSnarkmeister

    Fresh-Faced Recruit

    Joined: Jun 2007

    +1

    Taxation is theft.

    Malax, you are right. It's not fair. But the unfairness isn't about keeping the Internet tax-free, it's about the unfairness of all the other taxes on the brick-n-mortar stores. Every dollar taken out of the consumer's pocket in the way of taxes, is money wasted on $600 toilet seats, $700 billion bailouts of wealthy hucksters, and bombs to kill innocent children in countries half-way around the world. You are protesting the wrong thing.

  1. macbones

    Fresh-Faced Recruit

    Joined: Jul 2006

    +1

    tax

    NYS really has now business in any sales tax. NYS income tax already ranges up to 7%. Pay them another 7% sales tax, plus more in property tax, plus the federal income tax, SS tax, medicare tax, medicaid tax. . . we're up over 60% here.

  1. cyn1c

    Fresh-Faced Recruit

    Joined: Oct 2008

    -3

    It's double taxatation!

    The states know they have a good thing going with their double taxation and New York doesn't want to lose it!

    We already have to pay federal income tax AND state income tax directly out of our paycheck. Then we have to pay taxes on the stuff we buy with our already taxed dollars?

    If states want to make it far for all vendors, eliminate ALL sales taxes and increase the income tax if they need too. They should be getting their money from income tax only. This will also show the people exactly how much money the government is fleecing us for, and how little we are getting for it.

  1. cyn1c

    Fresh-Faced Recruit

    Joined: Oct 2008

    0

    Oops.

    and by "far for all vendors" I meant "fair for all vendors"

  1. ajhoughton

    Fresh-Faced Recruit

    Joined: Mar 2004

    0

    bricks & mortar

    Actually the online stores don't have an advantage over the bricks & mortar stores, since in many states with Sales Tax, you're expected to calculate the appropriate tax yourself if you purchase out-of-state and remit it to the authorities when you do your tax return.

    It seems that this particular rule is fairly widely ignored, which is probably why NY is trying to change to a situation where online retailers charge the tax themselves.

    The EU does something similar to what NY is trying to do here, and people outside the EU are equally resistant for equally justifiable reasons.

    FWIW, I think that Sales Tax and VAT (which is related, but not quite the same) are stupid taxes, because they are clearly going to result in these kinds of problems. Moreover in the case of VAT, because of the way it works it's possible to defraud the tax authorities for vast sums (apparently VAT fraud is running at close to 2bn per annum currently in the U.K. alone). Obvious solution: scrap these daft taxes and just have income tax (which is fairer anyway).

  1. trenchcoat77

    Fresh-Faced Recruit

    Joined: Aug 2003

    +2

    Correction to story

    I live in New York, and Amazon already collects tax on items sold to NY residents. They started doing this after NY passed the law. Amazon was trying to get the law overturned. Unless Amazon wins on appeal, there will be no change in how Amazon taxes NY residents.
    (The original story from TechCrunch has been corrected.)

  1. Monstermind

    Junior Member

    Joined: May 2000

    -3

    Paterson's Internet Tax

    This is all David Paterson's fault. HE is directly responsible for taxing the internet in NY state.

    To quote the Bush haters, he was SELECTED, not ELECTED. This cross-eyed pig needs to be removed from office by any means necessary.

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