New York – A New York Supreme Court judge has approved the state’s new-fangled Amazon Tax.
Subscribe to our Daily Roundup Email
Earlier this year, Amazon.com and Overstock.com sued New York over an ingenious new law that forces the big-name online retailers to collect sales tax if they maintain affiliate networks in the Empire State, Judge Eileen Bransten dismissed them both.
Bransten handed down her final dispositions in the two cases, which have been watched with a certain amount of trepidation by online retailers because of the precedent it could set for tax collection in states where they do not maintain offices.
Amazon and Overstock did not immediately respond to request for comment.
Back in April 2008, as part of its budget, New York enacted a new tax law called the Commission-Agent Provision, which requires out-of-state retailers to collect and remit sales and use taxes if they have a commission agreement with an in-state resident based on the referral of customers (provided that resident earns more than $10,000 in revenues from New Yorkers).
A 1992 US Supreme Court decision says that retailers needn’t collect sales tax unless they have a physical presence in the state where the customer resides. Otherwise, customers are required to declare the tax on their tax returns. But few do. With its new law, New York hung that physical presence tag on affiliate marketers.
On April 25, Amazon sued New York’s taxation department. Then, in May, Overstock suspended its relationships with any affiliates that had a New York address. And in June, the company sued the state, challenging the constitutionality of the tax law.
Both Amazon’s and Overstock’s lawyers contended that the law violates the Commerce Clause of the U.S. Constitution and the Due Process Clauses of the Fourteenth Amendment to the Constitution and sought a permanent injunction prohibiting New York from enforcing the law.
Amazon said it did not have a sufficient nexus (physical presence) in the state to be compelled to collect sales taxes and basically contended that it was being singled out with this tax law tweak. In the dance of the lawyers, New York moved to dismiss the Amazon and Overstock complaints, before Amazon and Overstock opposed the motions and moved for summary judgment from the court.
Judge Bransten basically shot down all of the company’s claims that New York state was picking on Amazon because it needed the dough.
“In the end, the Commission-Agreement Provision does not broadly tax any and all Internet sales to New York consumers,” she wrote in her ruling. “It requires a substantial nexus between an out-of-state seller and New York through a contract to pay commissions for referrals with a New York resident along with realization of more than $10,000 of revenue from New York sales earned through the arrangement. The neutral statute simply obligates out-of-state sellers to shoulder their fair share of the tax collection burden when using New Yorkers to earn profit from other New Yorkers.”
The dismissal of the Overstock case was based on the ruling Judge Bransten made in the Amazon case. It is fairly certain that both Amazon and Overstock will appeal these rulings. If they decide to, they will take up their cause with the New York State Supreme Court Appellate Division, and then it would go up higher to the New York State Court of Appeals. Because it is a constitutional issue, it could in theory get to the U.S. Supreme Court.
welcome to STUPID NY , now amazon will suspend all commision to NY based companies , and all those companies will move out of NY – how DUMB can these politicans be ?
the gemara teaches us “tafasta merubeh lo tafasta” (if you hold on to too much, you grabbed nothing). NY state and city is exemplifying this – by trying to annoy everyone from national companies down to parking tickets, they are just making everyone leave the place. they have lost tons of business to NJ in the past few years and will only continue to lose more. hmmmm….maybe that means more taxes and more tickets — when will they realize that it only hurts them more!
This amounts to an announcement “THE DEATH OF INTERNET COMMERCE”
I will go to NJ and do all my shopping there. Seriously.
NY law requires that NY residents pay use tax, which is basically sales tax that was not collected when the sale was made. Since most individuals don’t file use tax returns (this is, incidentally, a HUGE business issue, but that’s probably not what most VIN readers are concerned about right now), NY added a use tax line to the income tax form several years ago. Anyone who has purchased goods subject to use tax and left that line blank has been committing tax fraud. http://www.tax.state.ny.us/pdf/publications/sales/pub774.pdf
Amazon started collecting sales tax from NY residents June 1, 2008, based on NY’s revised nexus policy. Collecting taxes from out of state purchasers is a huge hassle, which is why the Supreme Court imposed restrictions on the states’ attempts to force businesses to do so, but this was really a no-brainer on Amazon’s part. If Amazon exhausts all appeals and eventually loses, they owe the amount that would have been due, plus interest and penalties, and it would come out of their pockets. If they eventually prevail, they owe nothing (but legal fees) and taxpayers are in the same position they would have originally been because they owe the tax regardless of whether Amazon collects it or they pay it directly to NY themselves.
The current ruling is just part of the game. It does not actually change anything for taxpayers.
5
It changes everything for the taxpayer because NOBODY files a use tax return and 99.9999999% of the people dont declare it on their NYS income tax returns.
As of now the State doesn’t have the stomach to widely enforce it, so they would like to force all the e-tailers to do their dirty work…..
typical NY shot in the foot it will come back to haunt in the very near future
Time to invest in a New Jersey mailbox?
I earn my living online. This means I need to block New York State from my website. I certainly do not wish to be forced to collect taxes for New York State or City.
I am a one-man operation. I do not have bookkeepers and/or accountants. This would force me to start collecting and filing tax returns, and making payments to New York …. sorry, the New York business is not worth it. Besides, they are some of the worst customers. Some companies barely tolerate NY customers as it is. They often have unrealistic expectations, and are rude in their eMail and in their business.
I sell to all 50 states and to at least 20 countries. The worse customers are from NY.
I cut out France due to delivery problems there, and now it looks like I will cut out New York due to its tax insanity.
CONSUMERS BEWARE!!!
New Yorkers should be aware that merchandise bought in New Jersey is NOT exempt from N.Y. State sales tax. Most N.J. stores that ship a customer in N.Y. merchandise will charge N.Y. State sales tax. There are however some stores in N.J. that play the game and use a loophole in the inter-state reciprocal tax laws . A N.J. store that does not have a nexus (physical presence in N.Y. and does not use it’s own trucks to deliver into N.Y ) is not obligated to collect the N.Y. sales tax , and the responsibility shifts to the purchaser. Any N.Y. resident that purchases from a N.J. store that does not charge the sales tax is by law technically obligated to report the purchase to N.Y. State and submit the tax.
In the past this was not much of an issue as N.Y. had no way of knowing about these purchases. Now however, there is a question on every New Yorkers tax return. They are asked if they made any purchases out of state. If a person answers in the affirmative they have to provide the cost of the purchase and are given a formula as how to calculate the tax due and submit it with the return. If they answer that they did not make a purchase out of state and the State finds out otherwise, then the consequences are very harsh. The State can potentially charge you up to 26 times the amount of the tax that you did not pay. So for example a purchase of furniture, appliances,etc. in the amount of 10,000.00 would calculate at 838.00 in N.Y. sales tax . That savings of 838.00 could end up costing the New York consumer up to 21,788.00 ( this is not a typo-twenty one thousand,seven hundred and eighty eight dollars ).
The chances of a New York resident being caught is reflected by the same odds that a New Yorker has a chance of being audited. If however , the N.J. store is audited , then every New Yorker that made a purchase from that N.J. store over 300.00 will be sent a tax bill at that greatly inflated rate mentioned above.
I had once asked a “Charedi” New Jersey store as to why they don’t inform the consumers about this potential liability and the answer was that they had asked their “Rov” and he told them that they are not obligated to do so. Is this Rov and the store owners so oblivious to the Din of “Lifnei Iver….” , “Thou Shalt not place a stumbling block,etc.”? How can they in good conscience put people in such a potentially precarious position ? Is the Rov or the store going to reimburse these consumers amounts that could total millions of dollars ? Do we have another potential scandal brewing like that occurred in Monsey with the meats ?
For those that are meticulous in Halacha , not paying the sales tax is outright Gneiva.For those that are not that medakdek they should be fully aware of the financial ramifications
This will just encourage people to use web sites other than Amazon, which don’t have a relationship with a New York business. No sales tax will then be payable. So the consumer will not be paying the tax, the state will continue to lose out on the revenue, and the only party to suffer will be Amazon.
#11 said:
“For those that are meticulous in Halacha , not paying the sales tax is outright Geneva.For those that are not that medakdek they should be fully aware of the financial ramifications”
You are wrong for several reasons.
The word Geneva does is ridiculous here. Geneva means taking something which is already owned by someone else.
Even secular Law does not regard Tax evasion as “stealing” it is not stealing. It’s only a law made a by a few people which wants you to send them money but no one owns that money until you agree to send it to the government and so it is not called stealing. It’s not even a CHOV unless you agreed to it.
2ndly, according to Torah one can only be required Halachicaly to taxes, only if the Tax Laws are fair and not corrupt. If Goyim make tax laws which yidden are treated unfairly then Halacha does not approve of such taxes as being valid al pi torah.
It is generally accepted the fact that frum yidden don’t get their fair tax dollar VALUE the same as Goyim, for example a Goy gets free public education and Yid has to pay taxes and gets no useful education because he can’t use public school, this makes it unfair and so you are Halachicaly Potur from Taxes.
I am not suggesting that you should not pay taxes. On the contrary I suggest that you do pay taxes to avoid possible penalties and to avid Chilul Hashem but Al Pi Torah there is no Chiyuv Per Say (except for incidental reasons why it’s a “good idea” to pay taxes) but you are NOT MECHUYEV al pi din.
For obvious reason you can’t expect any Rov to ever sign his name to the above but off the record, if the rov knows you well, he will tell you that the above is correct.
#13 – Do you also think income tax is voluntary?
I just hope Patterson gets voted out when he tries to run. He was only put there because of Spitzer getting thrown out. It is sickening all of the taxes Patterson and Bloomberg(another one who must get voted out) are trying to raise. They don’t give a dam about the economy or the taxpayers. Bloomberg alone has put a hugh future bill on the taxpayers by building two new baseball stadiums which we didn’t need. It’s disgusting,and now they are trying their luck to get more tax money from internet sales. What kind of a judge ruled for this Amazon Tax,it’s supposed to be unconstitutional and against interstate commerce laws. Now ever judges don’t care about laws,just want New York to bilk overburdened taxpayers more. There should be a tax revolt here. This is ridiculous. The taxpayer is not an endless cash cow for these unfeeling politicans like Patterson and Bloomberg!
# 13 SAYS THAT # 11 IS WRONG AND THAT HALACHA DEEMS UNFAIR TAX INVALID
It would behoove # 13 to seek Rabbinical and legal advice before issuing halachic and legal decisions that have no basis in halacha and law. Stating erroneous information misconstrues the truth and can cause others to perpetrate actions that would render them liable to injurious results.
Although this is not the proper venue to debate halachic issues which should always be backed by reliable sources , I do take umbrage by being told that I am wrong and will offer brief refutes to that effect.
Ganeva is most definitively the proper verbage to use in defining evasion of taxes that are due. By tax code law , the first funds of a purchasers payment belong to the State for the applicable taxes. For example on the purchase of an item for 100.00 in a city that has a sales tax rate of 10% which would bring the total to 110.00 , the first 10.00 paid belongs to the city.
The next statements where # 13 states that tax evasion is not stealing , and that tax laws are made by a few people, is so ludicrous ,that the blatant fallacy of that mistruth answers itself. Dinah D’Malchusa Dinah. We live in a country that has laws enacted by duly elected representatives .Would anyone entertain the idea of using # 13 ‘s definitions of law as a defense if they were accused of tax evasion ?
To publicly state that according to halacha we are not obligated to pay taxes is a gross misstatement of halacha and is groundless. There is even a scenario in halacha in which a local store that charges a customer the tax of that city on a purchase , and an out of the city store which is not obligated to charge the tax of that local municipality vies to compete for that sale , the out of city store is obligated by halacha to charge that same tax.
To reiterate , please do not make statements of halacha that are grossly wrong and put you in a situation of “Lifnei Iver “