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Amazon loses a New York court case that has been ongoing for around nine months

New York State Supreme Court Justice Eileen Bransten tossed out's lawsuit challenging the state of New York's right to collect tax from out of state transactions through the retailer.  Amazon reportedly failed to state a proper claim and "there is no basis upon which Amazon can prevail," according to Judge Bransten.

Amazon first filed a complaint in April, claiming the law was unconstitutional and too broad and vague.

The law comes into effect if a company doesn't have an office in New York, but has one or more workers who serve as online agents in New York.  For example, New York residents didn't need to pay taxes on products sold because Amazon doesn't have official operations there -- Washington state shoppers, however, must pay taxes, as the state has a headquarters and warehouses there.

State officials widened how "presence" could be described, as Amazon said advertisers aren't classified as official agents for  The company hoped to have the law changed and have the state pay for all legal costs.

The popular online retailer also has an Associates Program that helps unaffiliated web site operators get paid when advertising Amazon on their own web sites.  New York law indicates this eventually ends up being solicitation of business while operating in New York.

New York state officials said the new "Amazon tax" closes a "tax loophole" that should have never existed in the first place.  Furthermore, the judge said the New York law was "carefully crafted" and didn't offer a blanket tax on all Internet sales, and didn't unfairly target Amazon.

Even though the lawsuit has been thrown out by lawmakers, Amazon can still appeal the decision.

Amazon spokespeople said the new law unfairly targets Amazon, and the state could generate as much as $50 million through 2011 from the tax.  Taxing goods sold both in-state and shipped in could offer the state a new revenue stream to make up for the state's monetary struggles.

However, booksellers in the state are happy to see Amazon finally get taxed.

"The state of New York was subsidizing sales on Amazon to the degree of 8 percent," American Booksellers Association Oren Teicher chief operating officer told the Associated Press.  "That was unfair.  The government ought not ever be in business of picking favorites among competing businesses."

New York recently unveiled a new entertainment tax that would tax all songs through Apple iTunes, as the state's government faces a massive $15.4 billion deficit. 

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No surprise
By cmdrdredd on 1/14/2009 10:45:12 PM , Rating: 3
Liberals want their surprise a judge in NY wants to keep collecting taxes. Amazon should just stop serving NY or raise price for NY residents lol.

Kidding, but it seems unfair to the consumer who if they had lived in another state would pay no tax.

RE: No surprise
By ktheq on 1/14/09, Rating: 0
RE: No surprise
By ktheq on 1/14/2009 11:09:38 PM , Rating: 3
Any reasonable person living in New York would just pick up and move to Delaware. Freakin' liberals...


I'm from New York City. Sucks for me (a bit). But I suppose it could be worse. I mean, I could live in Delaware...

RE: No surprise
By bubba551 on 1/15/2009 3:21:48 PM , Rating: 2
Oh please stay in New York!

There is nothing more annoying than a blue stater who flees to a more frugal state to escape from the taxes and then votes for the exact same kind of politicians whose devastation he fled in the first place.

RE: No surprise
By Denithor on 1/29/2009 2:32:56 PM , Rating: 2
That's exactly what has happened in my state (NC). For the first time in over 30 years we voted for a Democrat in the presidential'd that happen? Population shift, that's how!

RE: No surprise
By Staples on 1/14/2009 11:52:11 PM , Rating: 5
As opposed to the conservatives who think the government runs on thin air?

RE: No surprise
By TheDoc9 on 1/15/2009 9:58:58 AM , Rating: 3
Well that is where our money comes from...

RE: No surprise
By crimson117 on 1/15/09, Rating: 0
RE: No surprise
By Chaser on 1/15/2009 9:17:04 AM , Rating: 2
A majority of them aren't having anywhere near the budget crisis' that those "champions of fairness" equitable blue states and cities are.

RE: No surprise
By KCjoker on 1/15/2009 6:20:44 PM , Rating: 2
Really? Check out how California is doing.

RE: No surprise
By Denithor on 1/29/2009 2:36:50 PM , Rating: 2
Seriously? Run that by me again...

Record $16 Billion deficit...about the same as NY this year, I believe...and you were saying?

RE: No surprise
By marvdmartian on 1/15/2009 10:20:49 AM , Rating: 4
You seem to be mixing up federal taxes, which are doled out by the federal government to all states for projects (i.e.- PORK) with state taxes (income, sales, property, etc), which stay within that state to provide money to run the state government and services. If NY state stopped collecting taxes, it wouldn't affect by one penny the amount of federal tax dollars sent to "poor red states", which pretty much makes your comment pointless and poorly thought out, doesn't it?

The problem with states that are in financial crisis is likely due more to their drastic overspending and waste, not due to any other state, red or blue. NY state needs to stop spending like there's no tomorrow, tighten their collective belts, stop throwing money into programs and services they cannot afford, and learn to live within their budget.....just like every American is now having to learn to do!

RE: No surprise
By Kary on 1/15/2009 5:50:53 PM , Rating: 2
Mind you I'm from a small town in Mississippi so maybe I miss out on how much waste there can be, but we are having a county budget crisis because no one knew or planned for gas prices to sky rocket.
School buses, police, ... quadruple spending for gas with no room in the budget to cover the extra expense (and there shouldn't have been room in the budget.. room in the budget just means you are over taxing for the services you are providing after all)

just my 2 cents

RE: No surprise
By bhieb on 1/15/2009 9:34:51 AM , Rating: 2
Personally I don't see the problem. In most states these laws were written well before mail order and online became big business. Why should Amazon have a built in advantage over local stores?

I love shopping online too and saving the sales tax. But if one assumes that government has a budget and WILL get its funding somewhere, why should that burden rest solely on local business. I never understood why the public in general thinks this practice is in anyway "fair" commerce.

RE: No surprise
By MightyAA on 1/15/2009 10:29:48 AM , Rating: 2
And the laws do not predate mail order shopping. Mail order has been around a very long time... just look at the Sears catalog; this was the only real way to get a lot of products back in the wild west days. Online has made it easier.

It's because the way NY is doing it, any ordered product is being double taxed which increases the price to the consumer. You forget that places like Amazon also pay sales tax locally at their headquarters. So it's like you driving across the state line and buying a pop at gas station. That gas station is supposed to track that you were from NY and pay NY taxes (as well as local taxes). That's just wrong... You should only pay taxes where the business is located, or they should change ALL tax laws to charge tax based on the purchaser's place of residence (a major pain, but that's how car sales do it)... you can't have it both ways. NY should focus on getting these large online sellers to relocate to their state instead of forcing their residents to fund their mismanagement cost.

RE: No surprise
By HrilL on 1/15/2009 2:39:46 PM , Rating: 2
They don't pay sales tax on items sold out of state and neither does any other online company. They only pay taxes on the items sold within their states if that state does charge sales tax.

RE: No surprise
By knipfty on 1/15/2009 4:33:45 PM , Rating: 2
Cars are taxed when registered. NYS will then credit back any sales tax paid out of state when applying the sales tax. The only people that NYS are hurting is its own citizens.

I expect Amzon to appeal this ruling and fight on. This will hurt their business model.

RE: No surprise
By Oregonian2 on 1/15/2009 5:16:00 PM , Rating: 2
Liberals want their surprise a judge in NY wants to keep collecting taxes. Amazon should just stop serving NY or raise price for NY residents lol.

This is I think exactly what would happen. NY customers would be charged sales tax on their Amazon orders.

Not sure what the fuss is though, in my state there are no sales taxes at all, even in walk-in stores. :-)

Amazon orders have always been taxed
By Donovan on 1/15/2009 1:56:27 PM , Rating: 2
If Amazon doesn't collect sales tax for your state, you are still legally required to pay it yourself. It's called "use tax" and some states have even added a line on their income tax forms to make it easier. New York is trying to get Amazon to do the collecting because few people report their out-of-state purchases voluntarily...they are enforcing an existing tax, not creating a new one.

Obviously Amazon wants to keep being able to undercut local businesses by an extra 7-8%, but their only legal argument for this case is objecting to the burden of collecting tax for states they don't operate in. That used to be a fair argument, but with computerized order processing it's hard to see a significant burden.

By foolsgambit11 on 1/15/2009 5:01:24 PM , Rating: 2
It's not the order processing that makes collecting taxes difficult. It's having to understand the tax law for 50 states and file returns for 50 states - additional lawyers, accountants, clerks, &c.

My question is if this relates in any way to the interstate commerce clause of the Constitution. The U.S. Congress has sole authority to regulate interstate commerce. Is there legislation by Congress authorizing the collection of taxes on out-of-state purchases? Or is there a body of case law authorizing it?

By Oregonian2 on 1/15/2009 5:18:21 PM , Rating: 2
If Amazon doesn't collect sales tax for your state, you are still legally required to pay it yourself.

I didn't think states could tax interstate commerce. Can they?

P.S. - Not that it matters to me, we've no sales tax at all in my state.

NYC .... You are red we must tax you.....
By phxfreddy on 1/14/2009 11:12:13 PM , Rating: 1 are white we must tax you are blue we must tax you

You see its all the same .... legalized theft in the name of the state. Any New York State is the worst in the nation for this.

I suppose its all in the name of the children right?

How sad. Our liberty slowly corroded by our collective excuse making for coercing our fellow man into doing what we think is best at the time.

RE: NYC .... You are red we must tax you.....
By stilltrying on 1/14/2009 11:33:00 PM , Rating: 1
Yep the state must rob Peter to pay Paul and then pull their commission from the transaction to manage it. Legalized plunder aint it great. A protected mafia.

And dont start with the BS. I pay for gas and gas tax to pay for the roads. This is just to steal from one to give to another.

By chick0n on 1/15/2009 8:30:58 AM , Rating: 1
I live in NYC and I hate this place more than ever.

Gas tax for roadS? kiss my ass, Ever since bloomberg came in The road has never been shittier, and look at the way he fuxked Manhattan's downtown, I gotta say I might move out of NY soon. I know his intentions, he is trying to drive poor people out of NYC, too bad I ain't poor Im way above middle class, but I just dont like the way he deal with things. Fuxk this shit.

By Fronzbot on 1/15/2009 9:36:55 AM , Rating: 2
I suppose its all in the name of the children right?

Yep all in the name of our children!
Oh, wait, what's that? Patterson wants to cut educational funding?

No worries, it's for our. . .children's. . .future?

*slams head into keyboard*

By MRsnufalufagus on 1/15/2009 2:15:52 AM , Rating: 2
Simple - Apple moves their servers and operations out of NY. Could do it in an afternoon via net migration. Then not only does NY not get their sales tax, but their economy gets another dent. Not very economic thinking.

By PrazVT on 1/15/2009 3:15:31 AM , Rating: 3
Or maybe just stop selling anything to NY residents for a year and see how the state likes it.

A nice thing to do...
By InternetGeek on 1/14/2009 11:35:16 PM , Rating: 2
Whenever an online retailer gets taxed this way, they should have their systems display clearly that because you live in area X your state charges a tax of Y% amount on your sale. That way people will get mad and start to complain.

Might be a gray area, but maybe search engines should do the same about their results being filtered in certain areas.

Technology has the power to give visibility over certain aspects of government that are normally opaque to the common person.

RE: A nice thing to do...
By Denithor on 1/29/2009 2:57:12 PM , Rating: 2
Might be a gray area, but maybe search engines should do the same about their results being filtered in certain areas.

They already do this. Have you checked out Google Shopping recently? Apparently not...

By dryloch on 1/15/2009 2:08:00 AM , Rating: 2
The states had their fun the last several years with inflated real estate values giving them high property taxes. They wouldn't even consider lowering taxes during this boom time so they kept adding more and more govt employees to the payroll and adding to the carry costs of govt. They had to know it wouldn't last forever. Now they want to raise our taxes to make up for it. I say screw that. Go back to the level of govt we had 5 years ago and they would have enough money. Do you realize they are proposing to charge 50.00 for a drivers ed manual from the DMV for crying out loud? There are states that saw this tax shortfall coming and cut services to match incoming revenue. Utah did it for one that I know.

By Denithor on 1/29/2009 2:49:31 PM , Rating: 2
And now Barak wants to add 600,000 more to the federal payroll. Good times, no?

Checks and Balances
By the goat on 1/15/2009 8:23:14 AM , Rating: 2
Even though the lawsuit has been thrown out by lawmakers. . .

"Lawmaker" refers to legislative or executive branch. This explicitly excludes the judicial branch.

RE: Checks and Balances
By foolsgambit11 on 1/15/2009 4:56:47 PM , Rating: 2
Yeah, apparently Michael thinks this ruling is "legislating from the bench"....

By john100 on 1/15/2009 7:13:00 PM , Rating: 2
Wow, that is unfortunate for those in New York and Amazon itself.

I would agree too that sales tax is generally horrendously complicated when I worked with some people on back-end tax related operations for another e-commerce site. On the note about Amazon,

Recently I came across an interesting table that details the discounts on Amazon (second tab from the left) at

Maybe that will help some others.

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