Amazon Tax Battle Rages in the Capital

WASHINGTON -- Three New York lawmakers on Capitol Hill are siding against Gov. David Paterson in an intensifying battle between the federal government and the states regarding the taxation of interstate commerce, the New York Sun reported.

The federal bill, known as the Business Activity Tax Simplification Act, prohibits states from taxing the income of companies that don't have a "physical presence" in the state, according to the New York Sun. It has been championed by businesses looking to lighten their tax burden but has drawn stiff resistance from many states eyeing greater revenues and expanding Internet retail sales.

Senator Chuck Schumer and Representatives Anthony Weiner and Gregory Meeks, all Democrats, are co-sponsoring federal legislation that could undercut taxes New York State imposed this year on banks and online retailers, such as Amazon.com, that have customers in New York but no offices here, according to the New York Sun.

Facing budget deficits and a slowing economy, the Paterson administration enacted two provisions this year aimed at boosting state tax revenues by tens of millions of dollars, the New York Sun reported. One that became known as the "Amazon tax" requires the Internet giant and other online retailers to collect city and state sales tax on all goods shipped to New York State. The other measure assesses a corporate tax on out-of-state banks that have issued credit cards to more than 1,000 state residents or earn more than $1 million from credit card customers in New York.

-- NYSSCPA.org News Staff

Posted on 7/17/08