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Newegg Defies New York Sales Tax Law
JagsLive informs us that the electronics retailer Newegg.com is defying New York lawmakers; it has suddenly stopped collecting sales tax from New York online shoppers. The "Amazon tax," which went into effect June 1, requires online merchants to collect sales tax if they have any affiliates in the state. Amazon is complying but has sued the state on constitutional grounds. Overstock.com dropped all of its New York affiliates and then joined the Amazon lawsuit. Newegg started out complying with the law on June 1, but stopped collecting taxes for New York on August 21. From Newegg's letter to its customers: "After careful review and consideration, we are pleased to inform you that we have stopped collecting New York sales tax, effective August 21, 2008," reads an email the company tossed at customers late last week, including at least one loyal Reg reader. "This decision was driven by your direct and candid feedback and our continued commitment to you as our valued customers."
It is required, in theory, but the Interstate Commerce clause of the Constitution prevents them from collecting tax on any sales across state boundaries.
They still try to do so, generally under the guise of a "use tax" that's conveniently only applied to purchases from out-of-state, but as far as I'm aware such unequal taxes have never been tested in court. IANAL, of course.
Benford's Corollary to Clarke's Law: "Any technology distinguishable from magic is insufficiently advanced."
Basically states claim that if a retailer has a physical presence in the state they must collect sales tax. If they do not have a physical presence they do (or did not) have to collect the tax although technically the individual doing the purchasing was supposed to have sent the tax themselves to their own state. That's called "use tax" and is starting to become something more states are getting picky about collecting. Here's a longer explanation: http://articles.bplans.com/index.php/business-articles/running-an-online-business/tax-on-internet-sales/
An outside observer might wonder why this is such a big deal since the tax is going to be paid as use tax rather than sales tax. The difference here is that sales tax is charge at the point of sale while the use tax is charged on state tax returns.
Use tax is notoriously hard to enforce because the state necessarily doesn't know about any items you bought in a different state. Many people lie about their use tax liability on their state tax returns because the state usually doesn't have any evidence to the contrary.
It doesn't matter how they feel. New York State can't tax a purchase made in Texas (or wherever Amazon is located) any more than they can tax a purchase made in Mongolia. Moreover, they can't impose taxes on New York citizens importing goods from other states, because the Constitution and its commerce clause forbid that.
He who lights his taper at mine, receives light without darkening me.
NewEgg put the onus on the NY taxpayer. On a NYS Income tax return form you're supposed to report the amount of any items you bought out of NYS which you didn't pay sales tax on. And you're supposed to then add the sales tax based on that line. Dont yell at me, just letting you know that its the NYS taxpayers responsibility.
You're omitting the difficulty in figuring out the tax status of items.
For example, in MA if you buy 1,2 or 3 donuts, that's taxable. If you buy a dozen donuts, that's not taxable. Why? One is consider "a meal", and one is considered "food" (i.e. groceries). Snacks over $3.50, taxable. Under $3.50, not taxable. Some clothing is taxable, some is not. Books are taxable, Textbooks are not. What makes a textbook a textbook? Retailers have fancy computer programs to figure out the tax status of each item, and even they get it wrong. The MA DOR recommends that you call or write for specific determinations "Because of the complexity of the law". http://www.mass.gov/?pageID=dorterminal&L=6&L0=Home&L1=Individuals+and+Families&L2=Personal+Income+Tax&L3=Forms+%26+Publications&L4=Publications&L5=Publications+Index&sid=Ador&b=terminalcontent&f=dor_publ_sales_use&csid=Ador#exempt
Uh, according to you own link, there are several states in the West that pay more than they receive. California ($0.78), Washington ($0.88), Oregon ($0.93). In fact, California subsidizes at a higher rate than New York ($0.79). So, yeah, we are pretty independent.
"Maine gets a little more than it pays"
Maine gets a shitload more than it pays ($1.41). Do you even read your own link before you post?