Bad News re NY Affiliate Tax – Judge Throws out Amazon, Overstock Cases
Bad news on the New York Affiliate Sales Tax front!
According to a breaking story by Business Week, “A state Supreme Court justice in Manhattan is dismissing the suit challenging the constitutionality of the legislation, saying Amazon had no basis for legal action.”
A PC World story surmises what we’ve all been worried about. If NY gets away with this convoluted sales tax loophole they are using affiliates to create – then other states will surely follow.
Coming Soon: More Online Taxes? “What does this all mean? It means the U.S. government wants to do away with measures that exempt online retailers from paying what it feels is owed money. Now that Amazon and Overstock’s objections have been thrown out, the battle against New York’s new taxation efforts becomes difficult–if not impossible. Buying goods online is likely to become more expensive.”
There is much speculation about the fact that Overstock and Amazon could and probably will appeal this dismissal. So this may not be over yet and the good thing is, it could possibly escalate to the Supreme Court which would make this a national issue.
According to the Channel Register: “It is fairly certain that both Amazon and Overstock will appeal these rulings. If they decide to, they will take up their cause with the New York State Supreme Court Appellate Division, and then it would go up higher to the New York State Court of Appeals. Because it is a constitutional issue, it could in theory get to the U.S. Supreme Court.”
Fingers crossed that Amazon and Overstock both appeal and take this all the way to the top! If you are at Summit try to find people from both companies and ask them to push it!
If you are new to the New York Tax issue here is a TON of background info.
New York Affiliate Tax Comprehensive Coverage
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#1 Missy (from G34 Media) wrote on Tuesday, January 13th, 2009:
Hi, Linda:
Not to sound to uninformed about the issue. But is taxation the reason affiliates in New York can’t join the Amazon program?
I sold a blog recently and the buyer who is located in New York, mentioned to me that because he was located in New York, he could not become an affiliate of Amazon.
He did mention to me that he would use his corp (or something) to become an affiliate.
Is this what it is all about? I have briefly looked into it. But as i am not from NY i never really delved too much into the topic.
Thanks for the update!!!
Missy.
#2 Linda Buquet wrote on Tuesday, January 13th, 2009:
Hi Missy,
Hmmm… last I knew Amazon WAS accepting NY affiliates. Are you sure he was told the reason was because he was in NY? If so I wonder when they changed their policy?
Here’s my original story about the Amazon suit:
Amazon Sues New York State Over Affiliate Related Sales Tax
They kept NY affiliates and started charging tax last I heard. If they are still charging sales tax, then there is no reason to decline NY affiliates???
#3 Missy (from G34 Media) wrote on Tuesday, January 13th, 2009:
Maybe i misunderstood or maybe it wasn’t Amazon, maybe it was CJ. Now i’m terribly confused. LoL.
I believe he took care of the issue. But to clarify, essentially if you live in NY you are charged sales tax as an affiliate? (An Amazon affiliate)
#4 Linda Buquet wrote on Tuesday, January 13th, 2009:
Oh no Missy, that’s not it at all. I know it’s confusing.
Affiliates don’t pay tax, the NY customers do.
If a non NY online retailer does not have an office or any employees in NY, by law that company does not have to collect and charge NY sales tax. But NY made a new law that in simple terms says if a company has AFFILIATES in NY, it’s just like having employees in NY so now the company must charge NY sales tax.
The retailers worry about this because it raises the end cost to the consumer and hurt their sales – so some retailers dumped all their NY affiliates so they would not have to add NY sales tax.
Hope that helps clarify.
#5 Missy (from G34 Media) wrote on Tuesday, January 13th, 2009:
Got it. Finally. Thank you for the clarification.
#6 peter bordes wrote on Tuesday, January 13th, 2009:
This is BAD!
Another one down and all the states will follow. making margins thinner for everyone and the gov fatter from their land grab. this does not help industry or individuals.
We need more liquidity going into our system and lives of companies and consumers. NOT going out. Very very disappointing. Makes me want to move our company out on NYC.
#7 dave wrote on Tuesday, January 13th, 2009:
I am an Australian and just read the above comments.
I can not believe the greed of your governments there.
The U.S government can bail out trillions of bad debt for
big business but charge the little guy affiliates more tax.
Un friggin believable.