If Newegg didn't find a way to get out of this tax I would be pissed. That blunts the sting a little bit.

I've always felt that internet sales taxes were bogus.

If I'm buying from a company in Florida, or Washington, or Texas, I should pay the sales tax for the state of origin, not my state of residence.

But yeah, I'm honest about my "Use Tax" on my state income form. Sure.

I'm with cromartie with the sales tax thing, although I'd like to add that there's always one solution, and it involves moving into the Cayman Islands.

They should change the name from Associates Program
to Assistants Program, therefore incurring no tax liabilities.

Amazon, please send me my $1,000,000 gift card for tax loophole accounting services rendered.

I'm curious about why Amazon brought suit in New York court instead of running to the feds. This seems more like an interstate commerce issue.

@CMU_Bueller: Don't rule that out as plan B.

NY State, the state of taxes, more taxes and oh yeah, did I mention even more taxes.

With that said, this doesn't shock me in the least. NY has taxed us on everything and anything they could think of rather than, oh, I don't know, cutting spending. (That would be to logical)

Oh, and I just can't wait until the Seneca's start burning tires on the thruway again to protest the tribal taxes NY wants to impose....... Awh, those were the good ol' days.

@cromartie: I always felt it's bogus to collect tax when people earn money and again when they spend it.

The problem Amazon has, that Newegg and other places don't, is that they have their "Associates" - i.e. various and sundry people all over the place selling goods via Amazon. Some of those people live in NY. Therefore, Amazon has to deal with NY state tax. Just like you'd have to pay NJ state tax if you bought from Newegg (I think they're based in NJ...).

if you accept any sales tax, you are going to have to accept internet sales tax.

as online sales continue to grow, the states will all start doing this.

watch.

@endless: They will, as they will likely follow the lead of New York and have those taxes included at checkout--in the same way you are charged from online purchases from Blockbuster or Payless, stores that do have a physical presence somewhere in your state. So the tax is not that sinister.

@Lynn12: liberal state, loves nObama and Clinton, get ready for more taxes across the board, all 50 states; socialism is here to stay (and ruin America once and for all)

Well, Amazon might refuse to ship to NY addresses? or maybe just absorb the tax? As endless says above "as online sales continue to grow, the states will all start doing this". Well, people will be less inclined to buy on the internet then, huh? So the sales will go down and put internet sites out of business. I don't know who is winning here. I guess no one.

Maybe if all the sites made a "SouthWest Airlines"-type fun rap video customers won't notice the tax? Huh???

@Lynn12: Cut spending? Yeah right. Patterson spent $4 million on renaming a bridge after some dead carpetbagging senator from his own party who did squat for the state and is probably going to appoint the guy who he named the bridge after's niece senator. We aren't dealing with the most fiscally responsible people here.

@banmojo:

I'm pretty sure 8 years under George W. Bush has ruined America. If we're lucky, a strong democrat like Obama will get us back on track and repair a lot of the damage that Bush has caused this nation and indeed this entire world.

@banmojo: I'm in one of the few red counties scattered across the rural areas in the state & it completely sucks to have your vote every 4 yrs. mean so little because the urban areas always go blue.

More on topic, we have been drowning in taxes for so long that I can't even keep track of the new taxes imposed each year. This year alone we have over 250 proposed new taxes and this internet sales tax is not even included in that number.

@shadowboxer524: Ok, we'll just up your tax when ya earn then ;)

@savdavid:

Amazon would lose monumental amounts of money refusing to ship to NY. Its really of little to them, they'll just charge it to the customer during checkout.

And I severely doubt that sales tax would be enough to put internet sites out of business. I order online because its cheaper all around, not because I get to avoid tax.

@savdavid:

this does hurt the internet.

people are used to basically getting a double discount, lower overhead on the internet, coupled with no sales tax and no enforcement of usage tax.

which i in a way love, as i dont like taxes, and i love low prices.

i also dislike it because it hurts local and physical stores. the internet vendors need the local places to stay in place so they have a price to compete against. i like online shopping, but i dont want to see all retail stores go away.

@CMU_Bueller: Is it though? Forcing Amazon to collect taxes on just the people from your state doesn't really affect any other states, so it isn't really an interstate commerce issue. Of course its been a year and a half already since I took my business law class, so I could be completely wrong.

Wow, that is unfortunate for those in New York and Amazon itself. I would agree too that sales tax is generally horrendously complicated when I worked with some people on back-end tax related operations for another e-commerce site.

On the note about Amazon, I recently came across an interesting table that details the discounts on Amazon at
http://www.uberi.com

Maybe that will help some others.

I know most people out here seem to think that there is a god given right to know taxes on internet purchases but given states budget, a wrecked federal budget thanks to the moron, we should expect this to become the norm. Why do internet companies think they are entitled to this competitive advantage over brick and mortar stores? Internet commerce will not die if states charge taxes. And the idea that its too costly to implement the software that has been out there for years from multiple vendors to charge the appropriate tax is a joke. So big minds, why do internet companies deserve this competivie advantage from the government?

@shadowboxer524: I always felt it's bogus to collect tax when people earn money and again when they spend it.

If you give me a million dollars, It gets taxed.

If I turn around and give that million dollars to someone else, it gets taxed.

If that person turns around and gives away the million dollars, yet again, it gets taxed.

Right?

@lordargent: The gifter pays the tax, the giftee just gets the million.

@Lynn12: The tribal tax thing is still causing some uproar. Police in Seneca County recently raided the gas station on native land and confiscated all their cigarettes, probably illegally. No one minded the cheap gas and cigs until the economy went south.

This has definately changed my online shopping behavior, however I still shop @ Amazon (and occasionally buy) when it's still the best deal despite sales tax being collected. I just bought some electronics from a Gold Box deal, and wound up with free standard shipping (NOT super saver) which sweetened the deal even more!

Amazon has already been collecting sales tax on every shipment to New York state ever since this law was passed. My guess is that the lawsuit was more about trying to prevent other states from hitting them with tax collection that it is about New York's law (though I have no doubt they'd like it to go away). Funny, though, if you purchase from one of Amazon's vendors (located in another state), you're not charged sales tax....

Absorb the tax? No way would any company in this economic climate do that. I wouldn't for my business. I'm sure many NY customers might grumble and complain at first - it may hurt Amazon in the beginning. But we are creatures of habit - and if people are comfortable with Amazon, they will be back.

hmm so Amazon can start collecting taxes on online purchases? They had been taxing my online buys since last June.

@banmojo: I live in a red state and our Republican state and local govt. is busy raising taxes everywhere they can think of. I wish I could move back to MN where at least we get something back in return for those taxes.

If we start getting sales tax on our Amazon grocery orders that removes a significant portion of why we use it. Our state taxes food.

I am just glad I don't run an internet business. If this keeps going where businesses have to collect for all 50 states plus calculate all those local tax fluctuations it will be a real mess. I am sure Intuit will come up with a solution to calculate but it will cost $400 a year.

@bohemian: Red or blue, it's pretty much all the same anymore. Both have a hand in our pockets constantly to fix their budget screws ups & this is just an example how NY doesn't want to miss even one penny of "what they're owed."

@bohemian: Don't stores like Wal-Mart and Circuit City already do this in states where they have physical operations?

Excellent idea!

Increase taxes when the economy is for s$%t!

We wouldn't need the taxes if we weren't becoming so hopelessly socialist.

@Lynn12: I'm a Democrat in a blue county in NYS, but all my representatives are Republicans. The irony!

@papahoth: Agreed 90 percent.

@Lynn12: It really surprises me that New York just can't learn its lesson. Its schools are failing, upstate gets screwed over royally year in and out by the City and one corrupt leader follows another.

There was a time when I was young and I wanted to move to NY (the Saratoga area) and yet despite requests from friends who live in NY I am staying here in MA for the time being.

It's really sad when MA is a better alternative to anywhere when it comes to taxes. Our taxes are too high (5.3% state income and 5% sales) so at least we pay less for our failing schools, corrupt aristocratic government and crappy roads.

@papahoth: I think it is important that we know our taxes.

Why do you think the government has a right to take more of our money? Oh and don't blame Bush. Blaming Bush is the new Godwin's Law.

@hankrearden: Increasing taxes during economic hardship has some historic precedent. I mean it worked so well for Herbert Hoover.

@papahoth: Probably because the internet company is most likely not using very much infrastructure of the state. If I operate in IL and I have a buyer from WA, I'm using all of the infrastructure in IL. Washington is providing nothing for me but a buyer (who takes care of WA through income tax, property tax, etc...). Therefore why should I give tax revenue to WA? A brick and mortar store is using it's roads, police, utilities, fire, etc... The internet company is using none of that.

Now if you were to argue that all sales tax money should go to IL, that would be one thing. I think it gets sticky when states want the tax based on where the buyer lives.

@RandomHookup: I think they do. But if they already have stores in those states, I'd wager that they are already setup to collect the appropriate tax from that location.

@battra92: I would love to be able to know all my taxes, but as I said, 250+ potential new taxes in NY this year alone makes it difficult, if not impossible, for anyone other than an account to know them all.

(I doubt the government even knows them all LOL)

@battra92: Actually the majority of the revenue is generated in NYC and goes the other way.

I don't have any great input, but have to mention that's an awesome picture accompanying the story.

@cromartie:

The problem with online-only shops is where exactly is the tax derived from, geographically speaking? An online-only company could have, say, "sales" servers in Washington, credit processing servers in Vermont, inventory servers in Illinois, etc. At what point in the chain can anyone specifically say, "this business is located here."?

A flat, national tax for online-only retailers makes the most sense. The problem lies with retailers offering in-store pickup. I'm not exactly sure about which part of the company directly receives the revenue from an in-store pickup, online purchase. Is it the local store or the corporation?

I'm sure NJ will be next follow, and those @ssholes will probably try to collect retroactively, i.e. I'm screwed.

I've always though it unfair that a retailer that sets up a store, provides in-store customer service, and has professional sales staff should be "penalized" by having to pay sales tax whereas a retailer selling solely online from another state pays no taxes. But for an online retailer to collect a different amount of taxes from each customer and then having to pay out to each state is going to be a mess. And who's going to monitor it? What prevents a retailer from collecting all the taxes and then not sending those taxes to the states? Is each state going to sue every single eBay seller out there for taxes? Probably not. Implementation is going to be tough here.

What do you mean by start collecting taxes? They've been charging New York taxes for months.