Amazon Sues N.Y. Over Internet Sales Tax Law

ALBANY, N.Y. -- Amazon.com is suing New York over a new law that requires out-of-state online companies to collect sales tax from shoppers in New York, The Associated Press reported Friday.

Officials estimated the state would gain about $50 million by requiring Internet giants such as Amazon.com to collect state sales tax. New Yorkers are currently on an honor system to report their online spending when they file state tax returns, the AP reported.

The state Legislature and Gov. David Paterson passed the law as part of the 2008-2009 budget. It applies to companies that don't have a brick-and-mortar presence in New York but have at least one person in the state who works as an online agent -- basically someone who links to a Web site and receives commissions for related sales, the AP reported.

The suit argues the change unfairly targets Amazon, is overly broad and vague, and violates the commerce clause of the constitution because it imposes tax-collection obligations on out-of-state entities. The suit also argues that the people linking to Amazon products are not agents, but are simply paid by the company for advertising, the AP reported.

New York state has argued that the law closes a "tax loophole," the AP reported.

-- NYSSCPA.org News Staff

Posted on 5/5/08