This is terrible news. If I was Amazon I'd eliminate all NY affiliates and tell them to contact their state. Lack of regulation and taxes is what makes the internet so awesome (and sometimes, awful).
To get around the “Amazon Tax,” Overstock.com terminated its relationship with any New York affliates; it also filed suit against the state of New York (as did Amazon.com, separately). Meanwhile, Newegg.com simply stopped collecting it.
So are affiliates different from advertising?
If I print an ad in a newspaper and include a coupon is that a presence in the state?
I hope new York isn't home to any publishing or advertising companies - this could be really bad news for them.
However, in this case other businesses with a presence in a state (say, Target) must pay the tax [...] while Amazon [...] doesn't.
An important difference is that a virtual store does not cost the local community money when it operates there. When Target physically locates in NYC, it uses physical NYC resources such as:
The NYPD annual budget is $3.9 billion, with 37,838 officers, 76 precincts, 12 transit districts, 9 Housing-Police service areas, 3000+ police cars, 27 police boats, 7 helicopters, 120 horses, 31 German Shepherds, and
3 Bloodhounds. http://en.wikipedia.org/wiki/New_York_Police_Department How much of that need is likely attributable to the fact that Amazon.com does business in NYC?
It's a similar story for the Staties. How many extra New York State Police (NYSP) troopers are required to be on duty, because of the virtual presence of Amazon.com in New York State? Here's the count: http://en.wikipedia.org/wiki/New_York_State_Police $0.668 billion budget, 5,572 employees (4,667 troopers and 905 civilians), and 12 troop facilities.
If Amazon.com did less or zero business in New York State, could the number of NYSP troopers be reduced?
While I agree in general, to say that Amazon has zero impact on the state is also not true, as the packages don't magically teleport to customers.
Along the way, UPS enjoys fire and police protection, places wear on the streets, requires traffic enforcement, city planning, water, etc.
Note that in theory, NYS residents voluntarily self-report and self-pay state and local use tax for purchases made out of state on which no tax was collected. I'm sure that amounts to hundreds of dollars per year for the state...
The judge said New York's law doesn't broadly tax "any and all Internet sales," but instead requires companies to collect state and local sales taxes if the company generates $10,000 or more in revenue as a result of commissions paid to persons in New York for sales referrals.
So, is that per affiliate (i.e. if no New York affiliate generated over $10,000, then Amazon owes no taxes) or aggregated (i.e. affiliates in New York generated $500,000 total payments, and Amazon now owes tax on said $500,000)? My guess would be for the latter.
No. The rule is that if Amazon does enough biz with NY affiliates, it has to pay sales tax on all sales to NY residents. (Of course, it can collect said sales tax from NY residents.)
