New Yorkers going Christmas shopping online at Amazon.com will find an 8.375% surprise at the virtual cash register, courtesy of Governor Spitzer, who is moving aggressively to collect Internet sales taxes that have gone widely unenforced…
When it comes to charging sales tax, e-retailers have been held to the same old standard that the U.S. Supreme Court set for mail-order vendors: The seller only needs to collect the tax on purchases in states where the vendor has a physical presence, such as a storefront or salesman. New York is saying that it has found a way around that obstacle to tax collection. Many e-retailers may have unwittingly lost their exemption because of the way they direct traffic to their Web sites, according to a tax memo recently released by the state’s tax department.
At issue is the “affiliate program” used by many e-retailers. Web site operators can provide a link to an e-retailer in return for a commission on any sale resulting from customers using the link. While the affiliate program may consist of little more than a non-descript advertisement on the computer screen, the tax consequences may be huge: New York state says it is the equivalent of having an instate salesperson…
Under this novel theory, any e-retailer who pays a New York-based Web site operator a commission would be required to start collecting sales taxes on any purchase from New York, regardless of whether it originated from an “affiliate.”
So Amazon will drop its affiliate program, leaving thousands of New Yorkers who count on their commissions for beer money pissed off and wanting to know what Spitz has against small businesses. Just tell me what I can do to help turn up the heat, Jeff Bezos. I’m here to serve.
Exit question: I guess this means I’m paying $65 for Assassin’s Creed instead of $60, huh? (Love you, Super Saver shipping!)