SmallBizResource Blog -- Retail

Amazon Sues New York

Posted by Gayle Kesten Friday, May 2, 2008, 12:29 PM ET

We saw this one coming.

Two weeks after New York approved a law that would force Amazon to charge sales tax to Empire State residents, the online retail giant has filed suit with the New York State Supreme Court.

In its complaint, filed April 25, Amazon asks the court to declare the "statute invalid, illegal, and unconstitutional, facially and as applied to Amazon." (You can read a PDF of the complaint on Wired's site.) The new law requires out-of-state online retailers to collect and remit sales tax if they have some kind of physical presence in the state, which includes affiliates that refer sales and receive a commission.

From CNET News: "That expanded definition clearly implicates Amazon, which says it has hundreds of thousands of independent Web site 'affiliates' through its 'Associates Program' to whom it pays a commission for linking to products for sale on its Web site."

Seattle-based Amazon calls New York's legislation too broad and vague, and says there's no way for it to be able to tell which affiliates are really legal residents of New York. According to its complaint, "Amazon does not track the legal residence of advertisers who participate. Advertisers are simply required to provide contact information, which includes an address...As a practial matter, this burden is impossible to meet."

The powers that be in New York are keeping quiet until they file a formal response through the courts. That'll happen in the next few weeks. Until then, I'll marvel at a New Yorker keeping his mouth shut.

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5/3/08 ADDITION: My local paper, Newsday, has a good piece in the op-ed section about how the Amazon Tax will result in "a tremendous loss of income for the numerous small New York businesses participating in affiliate programs."

Retail

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