The state of New York is set to begin collecting tax from some online retailers who do business in the state. And by some online retailers, we mean the law is targeted pretty firmly at Amazon, and may also affect some others. Not surprisingly, Amazon is none to thrilled, and the New York Times reports that the company has responded with a lawsuit against the state of New York.
Now, here's the interesting bit. Nobody's disputing that New York residents are supposed to be paying state sales taxes for items purchased from out of state retailers and shipped to New York. Even before the law was passed, people living in New York and many other states were supposed to keep track of such purchases on their own and send a check to the state. Of course, nobody actually does this, but it's the law. No, the issue is whether Amazon should be required to collect taxes
Typically you only need to collect state taxes if you have an office or other presence in the state. For example, if Amazon had a New York warehouse or distribution center. And then you need to collect taxes on everything sold to state residents, whether it went through that office, warehouse, or distribution center or not. But the law claims that because New York residents can sign up to be Amazon "affiliates," which means the post links to Amazon products on their web pages and make a commission, Amazon does maintain a presence in the state. Which sounds kind of weak if you ask us. But that's the crux of the law, and it's also the crux of the lawsuit.