Posted by Joe Maxfield
ALBANY, N.Y. (AP) - New York state won a round in court against
Amazon.com over a new law requiring out-of-state online companies
to collect sales tax from shoppers in New York.
The law applies to companies that don't have offices in New
York, but have at least one person in the state who works as an
online agent - someone who links to a Web site and receives
commissions for related sales.
A state Supreme Court justice in Manhattan ruled the suit should
be dismissed, saying Amazon had no basis for legal action.
"We felt all along that the legislation was built on a solid
foundation, apparently the judge felt the same way," said Tom
Bergin, a spokesman for the state Department of Taxation and
Finance.
Patty Smith, an Amazon spokeswoman, declined comment. The
company sued last year, challenging the constitutionality of the
legislation. It could still appeal.
The suit argued the change unfairly targets Amazon, is overly
broad and vague, and violates the commerce clause of the
constitution because it imposes tax-collection obligations on
out-of-state entities.
New York state argued that the law closes a "tax loophole."
Businesses with a physical presence in New York already collect
the state sales tax on online purchases. The proposed law would
apply to companies that have $10,000 or more in New York sales.
Officials estimated the state would gain nearly $50 million in
the next two years from the tax. New Yorkers, like residents of
many states, are currently on an honor system to report their
online spending when they file state tax returns.
Booksellers in New York have long protested the lack of a sales
tax on companies like Amazon.
"The state of New York was subsidizing sales on Amazon to the
degree of 8 percent," said Oren Teicher, chief operating officer
of the American Booksellers Association. "That was unfair. The
government ought not ever be in the business of picking favorites
among competing businesses."
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On the Net: www.amazon.com

(Copyright 2009 by The Associated Press. All Rights Reserved.)