Recently, Tim highlighted that NY state, in a desperate move to squeeze more tax revenue out of Amazon.com changed the law
to require Amazon to collect and pay NY state sales tax on goods shipped to New York. Federal law only requires that companies that have a physical presence in a state collect the sales tax. Amazon doesn't have a physical presence in New York, so New York redefined "physical presence" to include anyone who's a part of an affiliate program. Of course, Amazon affiliates are little more than advertisers of Amazon's goods. As Tim noted, this is effectively saying that any company may suddenly be forced to collect taxes if they just advertise
on a website based in a certain state.
In response, Amazon has wasted no time in suing New York State
, claiming that the law is unconstitutional, noting that it's "overly broad and vague," while also noting that it's clearly designed to squeeze extra taxes out of one specific company: Amazon.com. It probably doesn't help NY state's defense to hear that state officials even referred to the law as "the Amazon tax."