Sales tax clampdown on internet merchant
The shots heard 'round the web: Amazon.com has closed its internet associate programs in Hawaii, North Carolina and Rhode Island after the states enacted laws requiring out-of-state internet vendors to collect sales taxes.
-- By Jeff Segal, Considered view, 01 Jul 2009
Manhattan Supreme Court Justice Eileen Bransten dismissed the Internet giant's claim that the law, enacted in April 2008, violates the Commerce Clause of the U.S. Constitution and the Due Process and Equal Protection Clauses of both the state and federal constitutions.
Justice Bransten held that the statute contains the requisite requirement that an online retailer must do a substantial amount of business in New York before companies can be forced to collect and remit state sales tax.
"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," Bransten wrote in Amazon.com v. New York State Department of Taxation and Finance, 601247/08. "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."