Amazon.com is suing New York over a new law that requires out-of-state online companies to collect sales tax from shoppers in New York.
“We are challenging the constitutionality of the recently enacted legislation in New York,” Amazon spokeswoman Patricia Smith said.
Officials estimated the state would gain about $50 million by requiring Internet giants such as Amazon.com to collect state sales tax. New Yorkers, like residents of many states, are currently on an honor system to report their online spending when they file state tax returns.
The law applies to companies that don’t have a brick-and-mortar presence in New York but have at least one person in the state who works as an online agent - basically someone who links to a Web site and receives commissions for related sales.
Businesses with a physical presence in New York already collect the state sales tax on online purchases. The proposed law would apply to companies that have $10,000 or more in New York sales.
The suit argues the change unfairly targets Amazon, is overly broad and vague, and violates the commerce clause of the constitution because it imposes tax-collection obligations on out-of-state entities.
New York state has argued that the law closes a “tax loophole.”