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]