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Amazon Sues New York State over Requirement to Collect Sales Tax
New York State’s new law, which forces online retailers to collect sales tax on shipments to state residents, has its first challenge. Amazon.com has filed a complaint in the Supreme Court of the State of New York arguing that the statute is unconstitutional.
Under the new law, companies with a presence in the State of New York must collect sales or use tax on behalf of the state. The new law broadened the definition of “presence” to include any website based in New York State and which earns a referral fee for sending customers to an online retailer such as Amazon.
Amazon has hundreds of thousands of affiliates that feature links to its products. The law asserts that if even one of these affiliates is located in New York, Amazon must collect sales tax on everything sold in the state, even if it is not sold through the affiliate.
Amazon is seeking a declaratory judgment that the law is invalid and that the new law violates the Constitution’s equal-protection clause, as the statute was specifically aimed at Amazon. It notes that New York state officials have described the statute as the “Amazon Tax.”
The New York State Department of Taxation has stated that it will not comment on the suit until it files a formal reply with the Court.
For additional information, visit:
http://www.nytimes.com/2008/05/02/nyregion/02amazon.html?_r=1&oref=slogin