‘Amazon Tax’ Lands in New York:
With the passage of the hotly debated state budget last night, New York legislators approved a bill that will require many online retailers to begin collecting sales taxes on purchases shipped to the state, even if they have no operations or employees working there.New York Governor David Paterson is widely expected to sign the measure.
The so-called “Amazon tax” closes a loophole for Internet retailers who derive sales through affiliate programs in which Web site owners place a link to the merchant on their site and earn a commission on sales made from referrals. In lobbying for the bill, the industry group representing New York retailers had argued that the exemption from the sales-tax collection requirement gave out-of-state online retailers an unfair competitive advantage.
[...]
The tax was inspired in some ways by a 1992 ruling by the U.S. Supreme Court. In Quill v. North Dakota, the Court determined that out-of-state retailers cannot be required to collect sales tax on purchases sent to states where they did not have a physical presence. They argued that compelling merchants to adhere to the complexities of the state and local tax codes would place an unreasonable burden on interstate commerce.With the new law, New York is taking an aggressive stance on the Quill ruling, claiming that a retailer such as Amazon holds a physical presence in the state because it derives sales through its affiliates who live there, explained Hugh Goodwin Jr., a state and local tax attorney and partner at the global firm DLA Piper.
I suppose we might see Amazon drop its New York affiliates.