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May 2nd, 2008 (Modified on March 6th, 2009)

New York Imposes Online Sales Tax



New York State has passed a bill that would require online retailers to collect sales tax on purchases made by out-of-state buyers.

Amazon.com is suing to void the law, citing a 1992 Supreme Court decision. Online shopping is not supposed to be tax-free; shoppers are required by law to remit sales tax on out-of-state and online purchases. NY estimates that forcing online retailers to collect sales tax would net as much as $100 million more in state and local tax revenue.

The focus of NY’s case states there are countless affiliates within NY of online retailers, notably Amazon.com, that link to e-retailers like Amazon for a shared commission, and that their internet presence is the equivalent of an in-state sales force. Amazon’s lawsuit argues in part that any out-of-state retailer, online or not, that runs any form of radio or television advertisement should also be required to collect sales tax.

Legal experts agree that Amazon.com has the stronger argument and should prevail. Why you should care: If NY ultimately prevails you will pay sales tax on every online purchase.

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