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Amazon Sues New York for the Sales Tax

I hate online sales tax so I am totally biased against New York’s decision to start charging online retailers to collect state tax. Amazon has decided to challenge this in court arguing that the State of New York lacks jurisdiction to collect sales tax from Amazon on the basis that because of its lack of physical presence in the state and that there are no in-state representatives soliciting sales. Amazon has brought the suit under due process, commerce clause, and discrimination clauses. In this, I can support Amazon.

Jane Litte is the founder of Dear Author, a lawyer, and a lover of pencil skirts. She spends her downtime reading romances and writing about them. Her TBR pile is much larger than the one shown in the picture and not as pretty. You can reach Jane by email at jane @ dearauthor dot com

9 Comments

  1. MB (Leah)
    May 01, 2008 @ 08:35:44

    Starting in July, those in Washington state will start having to pay sales tax on any online purchase from anywhere. This really ticks me off and I’m happy to hear that Amazon is fighting this kind of thing even if it won’t help us in WA.

  2. Laura K
    May 01, 2008 @ 09:44:15

    I hate to say it, but I am actually pro online sales tax. I realize that paying sales tax sucks, but physical stores go out of business because people buy online where they don’t have to pay tax, and then property taxes and income taxes go up because there’s no other way for the state/locality to collect from residents. I live in NY, and have long enjoyed the fact that I don’t have to pay sales tax on Amazon purchases, but I also chose the town I lived in based on the fact that we have relatively low property taxes for our area because we have a bunch of businesses here that are picking up the slack, and I try not to buy things from online places if I can get them for a comparatively good price locally.

    I should say that I’m also an online merchant, and if all states went to this method of taxation, I’d have a heck of a lot of paperwork to do, but I am hoping they’d figure out something to make it easier on the little guy…me. As it is, I file sales tax returns in NY, MA, CT, and PA, and have to charge sales tax on anything shipped to those states. Shopping cart software automatically calculates the tax, so that’s not a big thing, but filing the paperwork has to be done on a state-by-state basis, and I’m not Amazon…I don’t have a team of accountants to do it for me!

  3. (Jān)
    May 01, 2008 @ 11:38:39

    Sales tax isn’t why I buy online as opposed to retail stores Linda. I buy online because they have what I want in stock, with less hassle. All this does is make it more difficult on internet businesses so I think it is discriminatory, in my own personal sense of that at least.

  4. chris doeblin
    May 01, 2008 @ 11:58:25

    I own an Indie bookstore, Book Culture on 112th street,so I am biased, but Amazon ought to collect and remit sales tax. Small independent businesses are vital to every economic and social and cultural value of our communities and offering such an advantage, tax free sales, is obviously a policy destructive to small independent businesses and therefor our communities. Think in terms of the world we are creating by our consumer choices. Let’s have a recognition of what virtue there is in shopping local, small and independent. In the long term, even the arguments of choice, cost and availability favor small independent commerce. The many social virtues of shopping local and small are huge and immediate. Shall we have contributions to our communities for social service education and health care? Support the virtues you want to live with by shopping where you live. Corporate giants are not going to care for you or your community. Amazon is willing to sue us, our state, and state clearly that they don’t live here and don’t work here and don’t want to contribute. Isn’t that clear enough? There is a high price to low cost and big box. Haven’t we paid it enough? At any rate people buying books and having them mailed to them in the same communities and yes states, ought to pay the same taxes that they are asked to pay when shopping in there neighborhood. There is hope for a vibrant creative cityscape. But we have to shop for it. Chris

  5. MeegieMacGroovie
    May 02, 2008 @ 05:41:10

    I wonder then, what about states with no sales tax? Would Amazon, to avoid paying out sales tax, just move down a state (to Oregon)? Can a state like NY force a business in a no sales tax state, to pay out taxes? Should they be able to?

  6. The Shop Local Fallacy | Dear Author: Romance Book Reviews, Author Interviews, and Commentary
    May 04, 2008 @ 04:00:47

    […] one of the industry news pieces I did this past week was a report of Amazon challenging New York State’s intent to impose a sales tax on internet sales. A commenter indicated that […]

  7. Maya Reynolds
    May 05, 2008 @ 22:22:52

    While I usually agree with your positions, Jane, in this case I’m going to take the opposite view.

    New York bookstores are forced to compete with Amazon for readers. Those bookstores have to pay local taxes. Those bookstores also hire local people and provide employment in their state. By not paying sales tax, Amazon is given an unfair advantage over the bookstores. New York’s action is leveling the field.

    I think Congress made the right decision to allow the Internet to grow tax-free when it was in its infancy. Now it’s time for the larger retailers to pay the same taxes that all other retailers doing business in a state must. If Amazon is going to use New York websites and local people for their “click throughs,” they should have to pay New York taxes.

    If they don’t want to pay the tax, let them stop using local people to advantage their business with their click throughs.

    Sort of the same choice they gave the small publishers. If you don’t want to use BookSurge for POD, take your business elsewhere.

    Funny how what goes around comes around, isn’t it?

  8. Overstock.com Sues NY Over Tax Collection Law | Dear Author: Romance Book Reviews, Author Interviews, and Commentary
    Jun 02, 2008 @ 07:48:40

    […] require online retailers who make sales to NY state residents to collect NY state taxes. Amazon filed suit in late April. Personally, I think tax strategies like this hurt the state more than help it […]

  9. Davery
    Jun 06, 2008 @ 02:14:07

    MB (Leah): Correction on the Washington Sales tax issue if you don’t mind.

    From the Destination Sales Tax Brochure put out by this state:

    “On July 1, 2008, Washington retailers delivering goods to customers in Washington must start collecting sales tax based on where the customer receives the merchandise – the “destination” of the sale. …The destination sales tax is a change for businesses that deliver merchandise in Washington. There is no change for over-the-counter sales where customers take home goods from the store location in Washington, and there is no change for sales to out-of-state customers.”

    The tax is only for people who purchase things in Washington state from Washington retailers, not for people in other states.

    The REAL PROBLEM is…online retailers in this state will have to charge taxes based on the destination of the product, not its origin. Doing that requires these retailers to track taxes for well over 400 tax jurisdictions!

    The state says they want to “level the playing field” for brick-and-mortar stores, but instead they make it totally unfair to the Washington online retailers, who ALSO now have to compete on an “unlevel playing field” with online retailers from other states!!!

    Clearly, Governor Christine Gregoire and the legislature couldn’t wait to give Washington online retailers the shaft for all those years of not being able to tax them.

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