Wed, Jan 14th 2009 5:33am
A judge in New York has tossed out suits from Amazon and Overstock which sought to overturn a state law there compelling them to collect sales tax on purchases made by New York internet users. The law was put into place last year and and immediately raised some eyebrows, as federal law allows states to collect local tax on internet purchases only if the retailer has a physical presence in that state. What set New York's law apart was that it considered internet retailers' affiliates, companies or even individuals that sell through the sites, to constitute a physical presence, giving the state the right to collect sales tax. It's highly unlikely that this is the end of the story with this law -- the suits will probably continue in another court, and it may become more common for internet retailers to ditch their New York-based affiliates until things get sorted out, or if the law is upheld. That's one problematic outcome of the law that's harmful to the people of New York; another issue is the dangerous precedent this law could set by allowing every locality to tax a wide array of internet purchases made by their residents, creating a morass of taxing jurisdictions for internet retailers to navigate.
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