Filed under: Business, Internet, News
Tax-free online purchases could be a thing of the past
So you know how you don't have to pay sales tax on stuff you buy online unless you're buying it from a company that has a physical presence in your home state? Yeah, that could all be over soon.New York Governor Elliot Spitzer has pledged not to raise taxes. But he's got a budget deficit to deal with, so he's trying to find new ways to collect taxes. And his administration believes they've found a loophole in that whole bricks and mortar thing.
Here's how it works. Sure, Amazon doesn't have a warehouse in New York. But lots of New York-based web sites have Amazon affiliate links. And Spitzer argues that effectively makes the New Yorkers who run those websites into Amazon salespeople, thus allowing the state to collect taxes from Amazon.
If Spitzer's plan holds up in court, it could open the floodgates and other states would likely be quick to follow. Either that or Amazon and other online retailers would stop offering affiliate programs. The plan is set to take effect in New York in December. So get your shopping done now.
Update: It looks like Spitzer has dropped this plan. For now.



Reader Comments (Page 1 of 1)
guerro said 1:57PM on 11-14-2007
This guy is the same douche bag who wants to give illegal aliens legal documents. Politicians wont stop until they soak Americans for every red cent they have. I wonder if he ever thought of cutting back spending or taking a pay cut or, GASP, work for a dollar per year until he turns things around? Sound familiar ?
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infolock said 2:02PM on 11-14-2007
It suprises me not in the least that this guy is trying to get away with this.
But the simple fact is I don't think it will pass through congress for the same reason that they aren't taxing right now. The internet is still the wild wild west in this area, and they can't regulate it without knowing for sure that a product was bought through someone else.
Their so-called "loophole" is their way of trying to convince the American people that they "can" tax them, even though that promise is a lie and more of just a threat to see how they react.
If they think they can get away with it and people will just believe them, they might get it to hold up in court. but if people pull the "BS" card, they might back down on this attempt.
Then again, as guerro so states, this *is* the same douche bag trying to legalize illegal immigrants. But, that's what you are going to get with these freaking moronic dems in office. =]
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Chris O'Rourke said 2:35PM on 11-14-2007
It seems to me if they are going to tax them based on the affiliates being "defacto Amazon employees" doesn't that actually make the employees subject to Washington state employment laws as well as require Amazon to have to pay unemployment insurance as well as send out w-2's to all affiliates?
This seems like one of those great ideas that had no actual input from anyone intelligent.
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Christina Warren said 3:37PM on 11-14-2007
I'm a big fan of Elliot Spitzer, this is just a stupid, stupid idea. If the NY Sun article is to be believed (and yeah it's the Sun so I'm dubious), it wouldn't apply to purchases made through affiliate links - but click-through links period - that's inane.
I DO think Internet taxation is going to have to be addressed, it's been more than 10 years - it HAS to be addressed, especially since distribution methods are totally different in many regards from the mail-order loophole that is being used. I'm probably in the minority, but I'm not that peeved at the whole idea of Internet sales tax, if only because the current system, that taxes you if a physical presence is in your state (regardless of whether or not your order is shipped from that state), has made ordering from anyone other than a web only place based someplace I do not live (or am not shipping my product to -- hence, I can't ship a gift directly to Seattle from Amazon without paying tax - event though it is being purchased in Atlanta) a taxable purchase.
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bweir said 3:49PM on 11-14-2007
Though IANAL, since Congress has expressly prohibited sales taxes on online purchases, most courts are going to take a dim view of a state that tries an end run around a Congressional mandate. And we all know that Federal law supercedes state law in almost every case, so this would probably never fly.
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chrisaroz said 5:15PM on 11-14-2007
What everyone fails to acknowledge is that even if the website doesn't charge you tax, you are still REQUIRED to pay the sales tax. Every state has a section on tax returns where you pay internet sales tax, most of the time it's a default number since the vast majority of people don't pay attention or track what they're really supposed to pay. The whole "Tax Free" thing for internet purchases is mainly an arguement of ignorance I'm sad to say.
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mostlikelyscenario said 5:20PM on 11-14-2007
All I know is, if I have to pay for shipping AND tax on every online purchase, I'm going to be doing a lot less shopping online.
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Aaron said 5:56PM on 11-14-2007
I grow so weary of seeing this type of post and sites saying, "tax free!".
Wisconsin has exactly the law pointed out in #6. And actually, it applies to ALL purchases, not just internet purchases. If you go to a neighboring state, and don't pay tax on clothes for example, you still must pay the local rate for taxes in Wisconsin. If you pay taxes in that state, and the tax rate is higher, you're credited the difference in the overall amount you owe for taxes (supposedly, although we've never been close to the amount to see what happens if it were to be less than zero in the end).
So, I already pay taxes on all Internet purchases, and many other states have the same rule. It's easy to track the purchases using a credit card and note that no tax was charged. That's what my wife and I do.
Although, we prefer when taxes are charged on the purchases, just so we don't have to worry about it later.
So, if NY passes the law, no big deal to me as we already have it. :)
I believe also that it's not a law that no state applies taxes to purchases, just that there isn't a federal tax *also* imposed on internet purchases.
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chrisaroz said 10:07PM on 11-14-2007
@Mysterius
Federal law prohibits the taxing of internet services such as internet access, not internet sales tax. Here's a Wikipedia article on the Internet Tax Freedom Act that explains it a bit.
http://en.wikipedia.org/wiki/Internet_Tax_Freedom_Act
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CUBSWILLWIN said 10:14PM on 11-14-2007
who knew new york could get so evil.
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Mysterius said 11:53PM on 11-14-2007
@chrisaroz: I'm no legal expert, but if federal law prohibits internet sales taxes, then wouldn't these sections of state law be overruled?
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Mysterius said 11:53PM on 11-14-2007
Well, if it's *that* easy to break sales tax laws, then they should either vastly step up enforcement or repeal them altogether. (The first hopefully causing outcry that leads to the second, of course.)
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Scott said 8:04AM on 11-15-2007
Prince Eliot has decided it's a bad idea to piss off the voters yet again; he reversed this decision, too:
http://timesunion.com/AspStories/story.asp?storyID=639200&category=STATE&BCCode=&newsdate=11/15/2007
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J. Benjimin said 11:01AM on 11-15-2007
I live in New York and this is just another step in the tax war that Spitzer started back when he was AG. He wants us to declare and pay sales tax on all out of state purchases that we make and bring back into the state too. This also includes all purchases we make on local reservations. So we get to pay tax in the state we visit during the visit, and then again when we send in our taxes in april, what a deal.
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STEVEN EPSTEIN said 11:36AM on 11-15-2007
OK I GUESS I HAVE TO SEND MY ORDERS TO MY BROTHER IN NEW JERSEY FOR NOW
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james 42 said 10:52PM on 11-15-2007
I don't get why everyone is attacking Spitzer on this, as has been pointed out, this is already part of the state income tax return and was there before Spitzer was even in office. It's total bull shit, but you can't fight the tax man.
One of the few reasons I miss Texas, no state income tax. At least not unless you're a small business owner, I hear Texas has something in the works for them.
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James said 5:08PM on 11-19-2007
I know I'm never going to get through to them, but for some reason it doesn't stop me from trying: ATTENTION NEW YORKERS! This is what happens when you vote a Democrat into office. Congratulations; you will get the government you deserve.
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phojo11 said 10:18PM on 11-24-2007
Not to turn this into a flame war... but James, I guess you're saying that NY should have voted in the party that spends an insane amount of money without any plan for paying it back?
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