New York tax law is already confusing enough. Not only do the rates change unexpectedly, get completely dropped or even disappear entirely at certain "tax holidays" throughout the year, now New York is trying to get a piece of the online pie.The new tax law for affiliates started with the former governor of New York, Eliot Spitzer who was recently forced to resign from his post after being linked to an high-priced prostitution ring. The law which requires that Amazon and other online retailers collect New York sales tax, did not disappear along with the resignation however, as the new governor Paterson could clearly see the revenue potential of taxing New York based affiliates.
This new law is a huge blow to big online retailers like Amazon.com who have already been fighting the issue with a lawsuit against the state of New York, which was filed in early May.
Other retailers have already started dropping their New York affiliates to avoid the issue altogether: Borders, the mammoth book and music retailer, has announced it will begin selling its own products online.
Complicating things further, the suit filed by Amazon begs the question - how important is location in the internet age? Locations across the globe are accessible by a simple Google search, creating the potential for consumers to buy anything from anywhere. Affiliate programs such as Amazon, Overstock and countless others have simplified the seeking out of merchandise for consumers. Why should a Seattle-based company like Amazon be required to collect New York taxes on behalf of a state the retail giant doesn't even reside in?
Andy Beal's Marketing Pilgrim has been closely following the story. In a recent post on the site, Janet Meiners states that this law would only work as "a hindrance to business" and hopes that "the courts will side against the law".
Affiliates will undoubtedly agree with these sentiments as will all those consumers living in New York who have become used to making numerous purchases online. Why should a user in New York buying something online from a retailer based out of state pay a New York based tax on the item? This is an area that undoubtedly needs definition and hopefully will be clarified when a decision is made in court.
