Amazon Opposes New York's Online Sales Tax Provision; ABA Reiterates Support for Gov. Spitzer

This week, Amazon.com announced that it plans to fight New York Governor Eliot Spitzer's proposal to require online retailers with certain selling activities in the state to collect and remit sales tax for sales made to in-state customers, according to published reports. In response, on Wednesday, February 13, the American Booksellers Association reiterated its support for Governor Spitzer's action.

Last month, Gov. Spitzer announced that he would seek legislative approval to clarify what constitutes nexus for online retailers selling to New York State residents. The provision, which is contained in the state's Executive Budget-Briefing Book, would mean that retailers such as Amazon.com would have to collect and remit sales tax for sales made in New York State.

On Tuesday, February 12, Paul Misener, Amazon.com's vice president of global public policy, told the AP that the New York State provision represents "a radical departure" from any other sales tax laws in the country.

However, New York State Tax Commissioner Robert Megna backed Spitzer's sales tax provision. In an interview on CNBC, aired on Tuesday, February 12, Megna stressed: "This is not a new tax," and explained that Amazon.com currently has a competitive advantage over "in-state retailers who have to collect and remit the tax."

Megna noted that eight out of the 10 top e-retailers in the country already collect and remit sales tax, "so this is not even a burden on e-retailers. Most of them are collecting tax for all of the states in which they are doing business. This is not something new and not something difficult for anyone the size of Amazon.com."

"We applaud the tax commissioner's statement," said ABA COO Oren Teicher, "and we fully support Gov. Spitzer's provision to clarify New York State's sales tax laws. Amazon.com, which has a market capitalization of $33 billion, should not have unfair competitive advantage over New York-based retailers, including the independent booksellers in the State of New York."

Teicher said that, if approved, the provision would play a significant role in leveling the playing field for all of the state's businesses and would help secure needed revenue to support essential local services. It is expected that the provision would raise $47 million for the state in 2008 - 2009, and $73 million in 2009 - 2010, according to the Budget-Briefing Book.

Although Amazon.com claims that Gov. Spitzer's provision is out of the norm, in his CNBC interview, Megna strongly countered that argument.

"What we ask folks is ... if they're selling goods in New York State and have a presence in New York State, that they collect and remit the tax for us," Megna said. "In the case of some e-retailers that are not collecting tax in New York State right now, we believe that, through agents acting on their behalf in the state they have nexus in the state and they should be collecting tax. To clarify that, we've asked the legislature in New York State to pass a law that makes that clear -- that they should be collecting and remitting tax to the state." --David Grogan [1]