Amazon.com, LLC, and Amazon Services, LLC, have filed a complaint in the Supreme Court of the State of New York that challenges the Internet Sales Tax provision in the state's budget. In a complaint filed on April 25, Amazon claims that the provision is "unconstitutional" because the statute "requires out-of-state Internet retailers, with no physical presence in New York, to collect sales and use taxes," as reported by Wired.
Though a legal challenge was expected, ABA COO Oren Teicher said, "While we have not yet had an opportunity to study Amazon.com's complaint in great detail -- since it was just recently filed -- we believe it is indisputable that online affiliate relationships constitute a physical presence in the state since they clearly operate as sales agents. As such, Amazon, just like the many remote, online merchants that already collect and remit sales tax on purchases made by New York State consumers, should be required to do likewise and follow existing sales tax laws. We were extremely gratified to see that New York State made that obligation clear in its recent budget, and we are confident that, now, New York's courts will uphold that action."
Most large online retailers already collect sales tax on online orders into New York and other states. In a February television interview, New York State Tax Commissioner Robert Megna reported that that eight out of the 10 top e-retailers in the country "are collecting tax for all of the states in which they are doing business. This is not something new and not something difficult for anyone the size of Amazon.com." Significantly, Amazon Enterprise Solutions, a division of Amazon, already collects sales tax in New York for companies like Target.com.
Nonetheless, in the complaint, Amazon argues that it should not have to collect and remit sales tax for purchases made by New York State residents since it doesn't have an office in the state, according to Wired. Court decisions affecting the collection of sales tax have said that an office, warehouse, or sales agent in a state constitutes nexus in that state.
A spokesperson for the New York State Department of Taxation and Finance said it would be inappropriate to comment on the legal challenge at this time.
As previously reported, ABA is urging New York booksellers and other independent retailers to thank their legislators for including the Internet Sales Tax provision in the final budget. ABA has created a templated, suggested "Thank You" letter to an assembly member and to a senator. "Considering Amazon's decision to challenge the provision, it is more important than ever that New York State legislators know that they have the support of independent booksellers throughout the state," said Teicher.