Amazon's Dispute with NY Over Online Tax

Albany (NY) - New York Governor Eliot Spitzer wants all US-based online retailers to be required to collect sales tax, but Amazon hopes that doesn’t happen.

Currently, residents are on an "honor system" to report Internet sales and pay the appropriate tax. Additionally, online retailers with a brick-and-mortar presence in the state must collect sales tax at the time of the transaction.

All other Internet-based stores are under no legal obligation to collect sales tax. Under the plan led by Spitzer, all e-tailers with annual sales of $10,000 or more in New York would have to collect the state’s minimum sales tax.

"This would be a radical departure from anything that’s being done anywhere in the country," said Amazon vice president of global public policy Paul Misener.

It’s an idea that has been on the docket at some point or another in more than a dozen states, but none have actually put a new policy in place. Several of them, including California, Michigan, and Texas have just abandoned the idea outright.

New York feels online stores have an obligation to collect sales tax. "We’re not asking Amazon to do anything that any New York vendor does not already do," said the state’s tax commissioner Robert Megna.

"It’s a terrifically unfair advantage that has cost the states in which they operate a vast amount of money," added Jonathon Welch, the owner of a local New York book store, in an Associated Press story. It’s estimated the proposed law would bring in an additional $47 million to New York.