New York to tax goods bought on Amazon

The online retailer and others must collect sales taxes, remit them to the state

The New York State Legislature has passed a budget that includes a provision requiring certain online retailers such as Amazon.com to collect sales taxes from online purchases and remit them to the state. According to the budget, collecting these taxes will bring in US$50 million this year.

The law, which will go into effect as soon as Gov. David Paterson signs it, will mean that Internet companies with some kind of physical presence in the state will have to sign on as vendors by June 1 and collect state taxes from New York customers, said Thomas Bergin, a spokesman for the state's Taxation Department.

Bergin said that if the companies don't register, they may face audits going back years. And if the state can prove they have had a physical presence in New York and are therefore subject to its tax laws, they will be responsible for remitting sales taxes on all the items sold to New York residents during that time. Residents of the state are required to pay sales taxes -- they can do so on their income tax forms -- on items they purchase, no matter where or from whom they buy, Bergin said.

Amazon officials could not be reached for comment.

Amazon itself doesn't have a brick-and-mortar store in the state, and therefore is not required to collect state taxes under a 1992 US Supreme Court ruling. However the state contends it does have a physical presence because it operates through a number of local affiliates, Bergin said. According to the state, if local companies put Amazon's affiliate code on their Web sites, then Amazon does, in fact, have a physical presence in New York. Affiliates make money by referring customers to Amazon.

A source said Amazon will most likely challenge the law in court.

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