How Newegg Stopped Collecting New York State Tax

Reader Chris Schiffner pinged Newegg to see why and how they stopped collecting New York State tax. They sent him an answer, posted after the jump, but here’s the short story: A new New York law would have required internet retailers using affiliate marketing to collect sales tax, so Newegg “restructured its affiliate marketing program.” The new structure somehow avoids having to collect New York sales tax. Shrug. Whatever, New York geeks, rejoice!

Newegg’s official statement:

Earlier this year, New York State passed a law which potentially forces non-New York State internet retailers to collect and remit New York State sales tax if the retailer’s marketing affiliates engage in certain marketing activities targeted at New York residents.

In response to this law, on June 1, 2008 (“Newegg”) began collecting sales tax on its sales to New York State residents.

Since then, New York State tax authorities have issued additional guidance as to the circumstances in which internet retailers would be required to collect sales tax. Based on this guidance, Newegg has restructured its affiliate marketing program in an effort to ensure that Newegg is not presumed under New York State law to have to collect sales tax.

What this means to our New York State customers is that, effective 12:00 a.m. Eastern Time on August 21, 2008, Newegg will no longer charge sales tax on its sales to you. However, please be aware that you may still have an obligation to pay New York use tax on your purchases. (Use taxes are not charged or collected by Newegg but are paid directly by purchasers to the appropriate taxing authority.) Newegg cannot offer you any tax advice, so if you have any questions about whether you have to pay use tax, please consult an appropriate tax professional.

Disclaimer: Nothing in this email shall be deemed an admission that Newegg has ever been legally required to collect and remit New York State sales tax on its sales to residents of that state. Newegg continues to challenge the validity of section 1101(b) (8) (vi) of the New York State Tax Law.

Newegg stop collecting sales tax: Additional Details [Schiffner]

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(Photo: Matt & The Camera)