Amazon is not OK with NY sales tax, sues the state of New York

That dumb law Gov. David A. Paterson signed off on last week has Amazon raging mad and they’re not going to take it. Last month the NY state legislature passed a bill that would require online retailers who have no physical presence in the state to collect sales tax.

The law uses a bit of a loophole to force online shops to do this. As most of you know, Amazon has a huge network of affiliates that link to products on the site and some of those happen to be based New York, so the state feels that because of that referral regardless of whether or not purchases are made through them is enough reason to impose the collection of sales tax.

Amazon is none to happy about this and filed suit against the State.

Amazon’s suit challenges the constitutionality of this interpretation and seeks a declaratory judgment that it is invalid. (Wired magazine posted a copy of the complaint here.)

Amazon’s complaint argues that the statue is “overly broad and vague.” It is impossible, Amazon wrote, for it to determine which of its affiliates are actually in New York State.

Amazon said that its affiliates are not agents but simply sites on which it places advertising. The commissions it pays the sites are simply one method of paying for those ads, it argued.

The online retailer further claimed that the new rules violate the equal protection clause of the constitution because it specifically targeted Amazon. “It was carefully crafted to increase state tax revenues by forcing Amazon to collect sales and use taxes,” the complaint says, noting that “state officials have described the statute as the ‘Amazon Tax.’ “