If your business does not have a presence in New York, you should not have to collect taxes on goods sold in New York. Even if they have a law on the books, it's uneforceable and unconstitutional per the 10th amendment of the US Constitution.
It sounds like to me that New York needs to cut their bloated budgets and concentrate on in-state tax enforcement rather than trying to bully Internet retailers or heap a bounty off giants like Amazon and Ebay.
for full article
Did you ever stay in a hotel in NYC? It took an extra sheet of paper to list all the taxes on the bill at check-out. Note: Upon reading this message, residents of NY or any other U.S. State, territory, or any illegal alien, enemy combatant, benevolent dictator or other carbon based life form shall pay a 17% in-or-out-of-state tax, a 14% non-paper printed information tax, a 33% luxury of reading it online tax, a 13% "help support wasteful legislative initiatives" tax, and a 22% "help support legislator pay raises" tax. Additionally, you may elect to donate the remaining 1% of the value of this message to support election reform or have that percent mailed to you at a later date. If you choose to have payment mailed, please send a SASE to: NY State Legislature, c/o IDK-PAC, 1 Offshore Banking Rt., Cayman Islands.
If this ever truly happens outside of NY, best of luck to the US Government to successfully strong-arm thousands upon thousands of ecom sites.
It makes sense, but I feel like they totally missed the boat.
Honestly it's going to be too hard for the states to manage. What I see eventually happening is a nationwide ecomm tax.
What everyone is failing to realize (To include the media) is that publically traded companines, Ebay, Amazon, etc... are all traded where? The New York State stock exchange. That gives the State of New York some very good power and some legal reach.
If you own a .com and you are a New York State resident, now New York considers you to have a Nexxus in the State even if you do not have a physical presence in the State besides your self and your computer.
Watch and wait.... Something will happen real quick as New York will try to make an example against a larger .com
It will be very interesting once things unfold in Federal court.
What really needs to happen is the federal government just needs to collect an internet tax for all states outside of your state of operation. Then they need to pay all the city/county/state taxes on THEIR time, not ours. A straight across the board "Internet Tax" would solve this whole issue! I myself am already having to collect sales tax in a state that I have no presence in (California) and I have vendors that are charging me tax in states that I have no valid registration in and it's BS that I'm having to EAT taxes that I don't even collect.
[edited by: MLHmptn at 10:26 pm (utc) on May 6, 2008]
Last week the DMA hosted a phone conference on this and their tax professionals had a significantly different take. Theire reading of the new code says that it only affects 'affiliate' relationships within the state of NY.
If you are an independent sales rep living in New York and selling products or services for an organization outside of new york, sales tax has always been assessed. This new code is stating that an online affiliate relationship is close enough to the traditional sales rep relationship so that sales tax should be paid. Direct sales to end users are not affected.
Furthermore, if the affiliate generates less than $10K per year, you don't have to pay.
The tax lawyer from the DMA was pretty confident that this would be overturned in the courts. A lot of the verbage was excessively vague and overencompassing. The state is asking merchants to sign up under their own volition with the threat of audits, and most of the big merchants on the call sounded like they were going to do that. However, a surprising number also seemed to be holding out until they have a better feel for how the wind is blowing.
It looks like Amazon has filed suit...
|Amazon sells merchandise exclusively online but the state contends it meets the criteria for sales tax collection because of its "associates" program. Associates receive up to 10 percent in referral fees from Amazon by creating links on their blogs or websites that enable people to click through and purchase products. |
Since there are Amazon associates in New York, the state contends they are considered sales representatives under the new law.
All affiliate marketers should keep an eye on this case.
I wonder what happens if the server is located in a Tax haven?
Server location has nothing to do with it. It only depends on where the individual or business operates from.