Today, ABA CEO Avin Mark Domnitz sent a letter to New York State Governor Eliot Spitzer on behalf of New York-based independent booksellers that decries the governor's decision to drop a plan to enforce existing sales tax laws.
In what was a stunning reversal, Governor Spitzer did an about-face on his previous decision to enforce existing state laws requiring out-of-state online retailers with nexus in the state to collect sales tax. With Internet shopping expected to grow by 18.5 percent, according to research firm eMarketer, the turnaround is sure to prompt many New York shoppers, enticed by tax-free shopping, to ship their shopping dollars out-of-state for the holidays -- at the expense of New York-based retailers.
In his letter to Governor Spitzer, Domnitz stressed: "We were surprised and disappointed to read of your recent decision to abandon plans to equitably enforce existing tax laws by requiring out-of-state retailers with nexus in the state to collect sales tax. We believe you had it right the first time: The November 9 memorandum from the New York State Department of Taxation and Finance made clear that online retailers with affiliates in New York are required to collect and submit sales tax. This is clearly existing state law -- not a new tax of any kind -- and we urge you to rethink your position and enforce the law."
Earlier in the week, the New York State Department of Taxation and Finance issued a memorandum stating that, under a clarification of existing tax policy, online retailers that have any affiliates in New York State would be required to collect sales tax on all items sold to consumers in New York. As such, retailers such as Amazon.com would have been required to register and begin collecting sales tax as of December 7, 2007, to avoid being assessed any prior sales tax due, civil or criminal penalties, or interest for failure to collect and submit any prior sales tax due. NYS Department of Taxation and Finance spokesman Tom Bergin said the clarification could have resulted in a windfall of about $100 million in previously uncollected sales tax revenue.