Paying Sales Tax Online
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Right now, the internet is a murky place when it comes to paying state sales tax. Generally, if an online business is located physically in one state, it only collects sales tax from customers from within that same state.
New York is challenging that. They have enacted a new law that says out-of-state online companies must collect sales tax from sales made to customers in New York. The law applies to companies, like Amazon, that don’t have a brick-and-mortar presence in the state, but do have at least one person living in the state and working as an agent for the company. In the case of Amazon., that would be the millions of people who use programs like Amazon Associates to earn a commission on items sold via affiliate links.
Amazon is suing New York, saying that the new law violates the commerce clause of the constitution by imposing tax-collection obligations on out-of-state entities.
New York state says the law closes a tax loophole that has been the subject of hot debate for a long time now.
One reason many people shop online is to avoid state sales taxes. This is a fact. I think we are looking at a very touchy aspect of our economy, and the potential to negatively impact many large online retailers, like Amazon.
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