Friday, October 18, 2013

Aamazon Tax Law Invalidated In New York

The Illinois Supreme Court had decided that a state law requiring online retailers, like Amazon, to collect sales tax if they have in-state Web affiliates violates federal tax regulations putting a discriminatory tax on digital sales. According to the Associated Press the court voted 6-1 to determine that the Illinois' 2011 "Main Street Fairness Act" was superseded by the federal law, which prohibits imposing a tax on "electronic commerce" and obligates collection that's not required of transactions by other means, such as print or television.

Illinois is one of several states that has imposed taxation on click-through-link or what is being called the "Amazon Tax". A legal regulation which required out-of-state retailers to collect state taxes on annual sales of more than $10,000 that involve in-state "affiliates," or website operators and bloggers, that draw consumers to the retailers' sites in exchange for a cut of each sale. Justice Anne Burke, writing for the court's majority, questioned whether there was any substantial difference between out-of-state businesses reaching Illinois consumers through a click-through-nexus approach or through other direct marketing approaches that aren't being taxed.

In her decision Burke wrote, "The click-through link makes it easier for the customer to reach the out-of-state retailer. But the link is not different in kind from advertising using promotional codes that appear, for example, in Illinois newspapers or Illinois radio broadcasts." Justice Lloyd Karmeier dissented, saying the federal law does not apply because the state statute doesn't "impose any new taxes or increase any existing taxes," but rather changes the definition of who's obligated to collect them.

The fight is far from over. The Illinois Department of Revenue, said it's considering asking the U.S. Supreme Court to intervene. did just that in August, when it sought a review of the New York Court of Appeals' March ruling upholding the law there. The Empire State was among the first to argue that a business with "affiliates" within its borders gives the company a physical presence there — a must if a state hopes to collect taxes from it, according to a 1992 U.S. Supreme Court ruling.

Amazon ended its affiliates program in several states including, California, New York and Illinois when the laws were originally adopted bypassing the some of the state requirements.

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