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Online Sales Tax Survives Latest Legal Challenge



By Navendra
16 September 2009 @ 07:46 pm AEST

New York - EARLIER IN 2008 the state of New York passed a law (dubbed the Amazon tax) that requires online retailers to collect state taxes from their customers. Both Amazon. com and Overstock.com objected and sued the state, but now a New York judge has thrown out the Web retailers objections.

The ruling, which essentially approves the Amazon tax, contradicts a 1992 U.S. Supreme Court decision that says retailers do not need to tax residents of a state where the company has no physical presence. Adding to the controversy surrounding the latest decision is the Streamlined Sales Tax Project (SSTP), a collaborative effort involving 15 states that's intended to you guessed it simplify the collection of sales taxes.

SSTP helps its members by sending tax collecting responsibilities to outside parties so that online retailers don't have to crunch the tax numbers themselves. The organization offers online sellers amnesty for certain unpaid or uncollected taxes, too. Basically, the SSTP is supposed to ease an online company's transition from not paying assorted states sales taxes to paying them.

Now that Amazon and Overstock's objections have been thrown out in New York, other states may follow the same course and require their residents to pay sales taxes on online purchases making shopping on the Web a little pricier for many more people.

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3.
September
19th, 2009
11:24pm

I believe this was another loss for Amazon vs. NY State. This was an appeals court ruling. Amazon will continue to fight this but their legal batting average is .000 They lost to Toys-R-Us and several earlier patent suits -- remember one click?

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2.
September
18th, 2009
1:53pm

Any facts available on this case? What court? Who was judge? Who were the parties to the lawsuit? This is potentially ground breaking decision and no factswere reported to understand the realities of the case. Was it hotly contested or was it basically a "default" judgment? If upheld this will change forever the consumer's motivation to buy big ticket on line at the same time it will shift hundreds of millions of dollars into local economies/tax collections.

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1.
September
16th, 2009
10:38am

The media tends to lump these two efforts together (Streamlined Sales Tax and Affiliate, or "Complex Nexus" taxes). This is unfortunate as the two initiatives have dramatically different implications, legal precedents, and costs to consumers and internet merchants large and small. There is a comprehensive article on the Fed-Tax blog called "Sorting out Sales Affiliate Taxes" that explains the difference at http://blog.fed-tax.net/2009/07/20/complexnexus/

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