Amazon Sues Over Law That Forces Them To Collect NY Sales Tax

Amazon has filed a complaint in NY’s State Supreme Court challenging a new law that forces the retailer to collect sales tax on shipments to residents of NY state.

The New York Times explains:

The issue is not whether people should pay tax when they buy goods from out-of-state sellers like Amazon. For decades, the state has required them to pay sales or use tax.

The question is whether the vendors must collect that tax on behalf of the state. Generally, only those companies that have a physical presence — like an office or store — in the state where the purchase is made are required to collect the tax.

The new law is based on a novel definition of what constitutes a presence in the state: It includes any Web site based in the state that earns a referral fee for sending customers to an online retailer. Amazon has hundreds of thousands of affiliates — from big publishers to tiny blogs — that feature links to its products. The state law says that thousands of those have given an address in New York State, although the addresses have not been verified.

The law says that if even one of those affiliates is in New York State, Amazon must collect sales tax on everything sold in the state, even if it is not sold through the affiliate.

Amazon is challenging the constitutionality of this interpretation of the law and claims that the statue is “overly broad and vague,” says the Times. They also claim that the law is unconstitutional because it was written specifically for Amazon, thus violating the 14th amendment.

Amazon Sues Over State Law on Collection of Sales Tax [NYT]
(Photo: Guillermo Esteves )