The Amazon Sales Tax Law

Recently, the State of New York passed a law stating that Amazon.com must collect and pay sales taxes for sales made to New York citizens.  Amazon.com has no physical presence in that state and has files a civil suit in Federal Court to challenge this law. You can read more about the specifics here.

We are encouraging all ecommerce site owners to block sales to residents of New York State in protest of this law.

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While the name and visible focus of this site is the NY "Amazon Tax" it is about much more than Amazon.com or New York's tax law.  It is really about the future of ecommerce and about our collective rights to choose where to shop and what to buy, not just online, but in your local store as well.

Why should you concern yourself with a New York Law?  Because every state government is watching. If New York gets by with this all the other states will jump on board. After that it will be down hill for online shoppers, with little return to the states for having tried to suck the life out of the internet.

We need people to understand that this is not about a state's rights to collect sales taxes. They do have that right and nearly every state has on it's books a statute that requires anyone who makes an out of state purchase, by phone or internet, to report that purchase and pay the sales tax. It is an honor system that does not work of course.  But just because a state's own method to collect has failed does not grant it the right to reach across it's borders to raid private companies time, money, talent and resources to collect its own sales taxes.

There are currently in excess of 7,500 different sales tax jurisdictions throughout the United States. In addition to the basic 50 state's base rate, thousands of counties and cities levy additional taxes to cover bond issues, road building and any number of other local projects.  A retailer would have to be able to know, at all times, what each and every jurisdiction demand, determine which location each customer lives in and calculate the correct amount of tax. Then they have to keep records of each jurisdiction and send a tax check to each state every month. In many states, such as in Florida, you have to file paperwork even if you DON'T collect any taxes.

At this point NY's law only goes after etailers selling $10,000 or more. But at the start of any year how does a site owner know what his sales will be? Will everyone selling online need to track sales for all of these different jurisdictions "just in case" they cross the $10,000 mark or do they just terminate sales in that state when they reach $9,999?  What about other state's jumping onto the band wagon but each with a different minimum sales limit? What if the limit is $100,  Or $1 ?

We need the US Congress to write some rules for interstate commerce regarding state's collecting sales taxes from companies with no presence in the collecting state.  The Supreme Court has already said states cannot compel collection by companies with no presence in the taxing state...but states are writing loop hole laws to try to get around this decision.

Congress must take action to stop, once and for all, these loopholes. It is not the responsibility of individuals and companies in one state to collect taxes for another state. States are sovereign and allowing one state to demand that a business or citizen in another state collect it's taxes for it is simply an invalid request.