The social network, with 60 million daily users, plans to begin selling sunglasses with a built-in camera for $129.99.
New provisions written into the state’s sales tax law define in-state affiliate sites as a physical presence, requiring retailers like Amazon.com without any other physical facilities in New York like stores or warehouses to collect and remit sales tax on all purchases placed by New York buyers. Other states may follow, experts say.
Who couldn’t use another $73 million? That’s what New York State figures it will earn in a full year of taxing online retail sales by out-of-state retailers like Amazon.com Inc. that get orders through affiliate sites based in New York.
New provisions written into the state’s sales tax law would define in-state affiliate sites as a physical presence, or nexus, serving as a basis for requiring out-of-state retailers to collect and remit sales tax. The provisions, expected to be signed into law by Gov. David Paterson, would modify existing state law that exempts online retailers from sales tax responsibilities when the retailers have no physical presence in the state like a warehouse or stores. “The provisions have determined that New York-based affiliates of remote online sellers qualify as a bricks-and-mortar presence,” a spokesman for the state’s Department of Taxation says.
The spokesman mentioned Amazon.com as a particular target of the provisions because it’s a large retailer that doesn’t collect sales tax in the state like other large retailers with physical stores as well as retail e-commerce sites. A spokesman for Amazon declines to comment, noting that the retailer is reviewing the state’s proposed changes to sales tax requirements.
The new law is expected to go into effect on June 1 and raise $50 million in sales tax revenue in the remaining 10 months of the fiscal year ending March 31, 2009, and raise $73 million in the full fiscal year ending March 31, 2010, a spokesman for the state budget office says. Retailers doing less than $10,000 through affiliate sales are exempt from the law, he adds.
The New York action could lead to similar legislative efforts in other states pressed for finding ways to generate revenue, says Daniel Schibley, a tax analyst for CCH Inc., a unit of Wolters Kluwer that publishes tax and legal software and publications. “A lot of states will look at this new idea of collecting tax on remote sales,” he says.