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New York to Implement an 'Amazon Tax'
theodp writes "NY Governor David Paterson is expected to sign a bill requiring online retailers to collect sales taxes on purchases shipped to the state, even if they have no operations or employees working there. The so-called 'Amazon tax', which applies to Internet retailers who derive sales through affiliate programs, would end what for many New Yorkers had been tax-free shopping and generate an estimated $50M in revenue this fiscal year. Experts predict that other states could follow suit with similar provisions."
My thoughts exactly. This has "interstate commerce" written all over it.
Whether you order from an out-of-state catalog or an out-of-state internet retailer, you owe local sales tax on the purchase, at least in each of the three states I've lived in.
However, the out-of-state business is not obligated to automatically collect it - that's the interstate commerce part. You are supposed to self-declare it. How many people do you suppose keep detailed enough records to calculate this on their state income tax form? Or bother to declare any of it?
Courts have determined that when you buy something through the mail, the sale takes place at the seller's location not the buyer's location. Hence, when a NY resident buys something from Amazon, the sale takes place where Amazon is based--in WA. The exception is if the seller has a "substantial business presence" in the buyer's state, in which case the sale is considered to have taken place there.
It's not even a question of the seller not being obliged to collect the tax. In the example, NY has no authority to tax sales completed in WA.
To get around this, many states have so-called use taxes that are typically equal to their sales tax rates. Use tax is collected when a resident brings a good bought out of state back into their state of residence. The rationale is that the use of the item is being taxed, not the sale of the item. In practice, states only routinely collect use taxes on cars, because it's typically part of the process of registering and titling a car in a new state.
Personally, I can't see how NY is going to be able to enforce this law. They can't compel businesses outside of their jurisdiction to collect and remit these taxes without some sort of federal law.Not so fast: You're right that thanks to the "dormant commerce clause," New York can't burden out-of-state commerce or commerce that just passes right through New York without stopping. For example, New York can't tax goods that pass through New York on their way from Maine to Florida on I-95, nor commerce that happens in other states.
But, almost every state that has a sales tax also has an excise tax for people who import goods from out of state. For example, in most states if you import a car into the state then you pay the sales tax on the car even if you bought it in a state with no sales tax.
New York can very constitutionally tax goods that are used in New York. And it can reach Amazon to enforce it because Amazon has "purposefully availed" itself of the New York market by advertising there and shipping orders there. See the case Asahi Metal.
You mean the import/export clause: No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports...
The terms "import" and "export" in the Constitution refer to imports and exports from other countries. See the treatise here: "Only articles imported from or exported to a foreign country, or âoea place over which the Constitution has not extended its commands with respect to imports and their taxation,â are comprehended by the terms âoeimportsâ and âoeexports."
Case: Hooven & Allison Co. v. Evatt, 324 U.S. 652, 673 (1945), holding that "These provisions were intended to confer on the national government the exclusive power to tax importations of goods into the United States."
Last I checked, Amazon shipped from within the US, so it doesn't apply at all.