A new bill dubbed as “Amazon Tax” has just been approved by New York Legislators and is now awaiting the approval of New York governor David Patterson. The bill if signed into a New York law will require online retailers, such as Amazon, to collect sales taxes on purchase shipped to New York. In effect, the bill would end New Yorkers’ tax-free online shopping activities.
James Sherin, president CEO of the Retail Council New York, said that the new tax measure will level up the playing field between New York retailers and online retailers who are not located in New York, according to internetnews.com.
“This is a first step — but a critical one — in our ongoing battle to level the sales tax playing field between New York retailers and the out-of-state Internet giants that have, for years, capitalized on an unfair and unintended competitive advantage driven solely by tax policy,” said Sherin.
New York retailers have been complaining of unfair competitive advantage enjoyed by Internet retailers who get their sales from referrals made by web site owners who placed links on their sites. The New York retailers argued that these online merchants were not charging sales taxes despite the numerous successful transactions they made with consumers in New York.
As early as its deliberation stage, the bill has already received criticisms from Amazon and conservative tax policy analysts, but still, the bill was pushed to New York legislators, perhaps, because of the estimated $50 million tax revenue that it is expected to generate for the NY government.
The new tax measure on online shopping transactions might also establish a precedent, and other states might follow New York’s initiative. Hence, ending online shoppers’ tax-free shopping activities.
Incidentally, online consumers are required by law to report purchases they make online from out-of-state internet retailers when accomplishing their tax returns. But many are simply not aware of the tax requirements, while others simply ignored them. So, making online retailers collect sales taxes from consumers would seem to be the most efficient way of collecting these taxes.