Overstock.com Joins Amazon.com; Sues New York Over Amazon Tax

Overstock.com had already severed ties to all its New York affiliates, thus earning relief from the new tax. Etailers are required to collect sales tax if they have advertising affiliates based in the state (e.g., Amazon Affiliates). Formerly only companies with actual brick-and-mortar sites within any states were required to collect sales tax --- in any state, not just New York.

In a press release, Overstock.com outlined the lawsuit, in which they challenge the constitutionality of New York's new law.

Overstock.com, which is based only in Utah, has no operations in New York, and sells exclusively through the internet, views the new law as unconstitutional under both New York and federal constitutional provisions, including due process clauses under both constitutions and the commerce clause of the U.S. Constitution as well. The complaint filed in the New York Supreme Court calls upon the court to issue an injunction and to declare the law unconstitutional. It names as defendants in the suit the New York State Department of Taxation and Finance, and Tax Commissioner Robert L Menga and Governor Paterson in their official capacities as state officers.

"I am confident of our position in the suit," said Mark Griffin, Overstock.com general counsel. "The applicable United States Supreme Court cases on the question of whether the state can collect taxes under these circumstances make it clear that New York cannot constitutionally require Overstock.com to collect these taxes."

In a 1992 Supreme Court decision, Quill vs. North Dakota, the Supreme Court ruled that out-of-state retailers cannot be required to collect sales tax on purchases sent to states where they did not have a physical presence.

The Supreme Court’s reasoning was at least partially based on the fact that, at the time the case was decided in 1992, there were over 6,000 separate sales and use tax jurisdictions in the United States (states, localities, special tax districts, etc.) and to impose a collection obligation on a remote seller would impose a crushing burden that would severely restrict interstate commerce.

While Overstock.com has severed ties with New York affiliates, Amazon.com has indicated it will begin collecting sales taxes, despite its own lawsuit.

Source: By Tech Ex http://technologyexpert.blogspot.com/