It looks like the era of tax-free purchases from web based stores could be coming to an end. A while back, the state of New York decided it could raise a bit of much-needed revenue by collecting tax from online retailers. Generally states can only collect taxes if those retailers have a bricks and mortar presence in the region. But New York figured out an interesting way around that - it decided that advertising affiliates counted as a physical presence. In other words, as long as at least one New York State resident made money by placing Amazon ads on his or her web site or blog, New York could collect taxes.

And now it looks like the New York state Supreme Court agrees with that logic. Amazon and Overstock.com had sued the state over the law, and Newegg had decided just to stop collecting taxes. This week's ruling could change all of that.

This could be the beginning of the end for tax-free online purchases. Or it's possible that we could see Amazon, Newegg, Overstock.com, and similar web retailers kill their affiliate ad programs in order to stay competitive with companies that don't have to charge tax in states like New York.

It's worth noting that most states do actually require citizens to pay taxes on items purchased online. It's just that you're supposed to report those purchases voluntarily on your annual tax returns. And almost nobody does this. What's new about New York's law is that it requires the retailers to collect taxes.

[via Alley Insider]

New York, the state that brought us taxes on items bought over the internet is at it again. This time governor David Paterson is considering a 4% tax on music and other digital media downloads.

To be fair, times are tight and Paterson is also proposing raising taxes on soda, cable and satellite TV, gas, cigars, beer, and movie and sports tickets in order to balance the state budget. But at a time when residents finances are at least as tight as the state's, I imagine these proposals won't be very popular in New York.

Amazon, Overstock.com and other retailers are already fighting New York's internet sales tax in court. Something tells me Amazon and other companies that sell digital music and movies to New York citizens aren't going to take the new tax proposal sitting down.

While Amazon plans to fight New York's recent decision to start collecting, the company has updated its tax collection page to let NY customers know that it will begin collecting tax on June 1st.

The state of New York recently passed legislation which requires any company with affiliates in the state to collect taxes on any items sold in New York. That covers companies like Amazon which allow individual bloggers and web site operators to add links to Amazon products on their web sites. Amazon doesn't actually have any warehouses or business offices in New York. But thousands of New Yorkers who blog who run part time businesses from their home are considered representatives of the company under the state law, which means Amazon has to collect taxes.

Yesterday, Overstock.com decided that the easiest way to avoid paying taxes was to temporarily suspend its relationships with New York-based affiliates. But Amazon, which has already vowed to fight the new law in court, must be making a fair amount of money from New York based affiliates, because the company will instead collect taxes until the issue is resolved, even if that discourages some New Yorkers from buying products through Amazon.

[via CNET]

The state of New York recently adopted a law that requires online retailers to collect taxes for items sold in New York if they have affiliates based in the state. That might sound like a reasonable request if New York shopping malls were littered with Amazon and Overstock.com kiosks. But the affiliates the law refers to are web publishers and bloggers in NY who happen to post links to stores like Amazon and Overstock in exchange for a small commission.

Needless to say, some folks aren't too happy with the ruling, and Amazon has already sued NY. Overstock.com is apparently taking a different approach. The company has begun sending out letters to affiliates in New York, letting them know that the company will, at least temporarily, be ending its relationships with NY affiliates.

In other words, New York doesn't get to collect any taxes from Overstock.com, and the state has probably just ticked off a whole lot of New Yorkers who had affiliate relationships with the company.

Thanks Scott!

You know how if you live in most states in the US you don't have to pay sales tax on items purchased online? Yeah, that's about to change for about 19 million residents of New York State. Legislators have approved a bill that requires large online stores to collect sales tax for anything shipped to New York.

Technically, the tax isn't new. Consumers were supposed to be reporting these purchases on their tax returns all along, but nobody really does. The law just passes the burden from consumers to retailers.

While the bill doesn't become a law until Governor David Paterson signs it, he's expected to do so soon, as the measure is expected to raise $50 million and help balance the state budget.

Companies that collect less than $10,000 per year from sales to New Yorkers will be exempt. But something tells us that means you'll be paying taxes on purchase from large stores like Amazon.

Update: As we've reported in the past, this law wouldn't require all online stores to charge tax, but only online stores that do some form of business in New York State. And that business can include something as simple as operating an affiliate link program that lets New York residents make a few bucks by linking to Amazon products on their web pages. Former governor Eliot Spitzer had proposed the law late last year, but we had thought it was dead -- until yesterday. While it's possible that one outcome of this law could be businesses pulling out of New York altogether, a much more likely outcome would that Amazon and other companies with affiliate programs could refuse to let New York citizens sign up for affiliate accounts.

Some internet startups take months or years of planning. Others can be put together in just a matter of days with a good idea and a little pluck. In July a group of 70 people got together in Boulder, Colorado to vote on ideas that had been proposed. Over the course of a single weekend, they chose an idea and created Vosnap, an online polling tool.

This weekend, 120+ people have signed up for a similar "Startup Weekend" in New York City. The group will choose from more than 15 ideas, and try to put together a business plan by Sunday.

Vosnap is up and running, but isn't making money yet. But the process was successful enough to encourage Startup Weekends around the world. Future events are planned for cities including Boston, Atlanta, and London.

[via Silicon Alley Insider]

There's big news from AOL today. This blog's parent company is moving its corporate headquarters from Dulles, Virginia to New York City as part of a new advertising-based business model.

Over the last few years AOL has been making the transition from a company that was primarily a internet service provider to one that provides content and access to online services like e-mail and instant messaging. Goodbye billions of free trial CDs, hello advertising.

A few months ago, AOL purchased behavioral-targeting ad firm Tacoda. AOL already owns several other online advertising properties including Advertising.com. The company is putting all of its advertising resources together in a new group called Platform A that will focus on matching advertisers with AOL and third party advertising opportunities.

The company will continue to have office space in Virginia, Mountain View, CA, and other locations. But the headquarters will be moving to New York, which is widely seen as the advertising capital of the country.