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The Real Deal: Sales Tax on Online Purchases

ALBANY – New York State’s highest court rejected a challenge to the Internet sales tax law on Thursday.  Amazon and Overstock.com sued the NYS Tax Department seeking to overturn a law that requires internet retailers collect and pass along state and local sales tax if they solicit business in New York through a link to their websites.

 

The state law passed in 2008 and since then, most online shoppers have been paying NYS and local sales tax.  Amazon and Overstock.com had argued that online retailers without a physical presence in the state, shouldn’t have to collect taxes for it but the Court of Appeals ruled that if a website is soliciting business in New York through a link to their website, it must collect sales tax. 

 

No brick-and-mortar merchant opens up his door or her door so they can say gosh, I really want to be a tax collector, we have to collect the tax, it's the law.  What this is, is a matter of fairness.  We’ll compete with amazon.com on price, service, selection but don't make us compete with them when they have a shelter from this thing and we as main street merchants have to do it by law,” says Ted Potrikus from the New York State Retail Council.

 

In response to Thursday’s decision, a spokesman for the NYS Tax Department says, “today’s Court of Appeals Decision affirms New York State’s approach to ensure fair tax administration for both brick-and-mortar and Internet-based businesses. We commend the Court for recognizing the logical application of existing precedent to the 21st Century economy. Since being implemented, this law has resulted in the collection of roughly $500 million in State and local sales tax. This is equivalent to approximately $6.0 billion of taxable retail sales into New York that were previously made without the sales tax being collected.”