New York To Enforce Out-Of-State Sales Tax Collection: Report

New York State is preparing to collect taxes on e-commerce sales, according to the New York Sun newspaper. The move would add an 8.375% surcharge — the state’s tax rate — to purchases made online.

The new regulation shifts the burden of reporting such sales from the purchaser to the online vendor, the Sun continued.

According to the Sun, online retailers have traditionally been treated the same as mail-order marketers — taxes were only collected when the marketer had a physical presence in the state, whether a storefront or a salesperson. But New York State’s Department of Taxation and Finance has determined that affiliate links on Web sites serve as physical presences, according to the Sun.

As a result, any sale that resulted from a customer using such a link would be subject to taxes, if the owner of the link is a) based in New York and b) paid a commission by the retailer, the Sun said.

“It is unfortunate and particularly ill timed to impose a legally questionable tax collection responsibility just as companies are headed into the all-important holiday season,” said the Direct Marketing Association’s executive VP for government affairs and corporate responsibility Steven K. Berry in a statement.

“This is an overreach of authority that will harm consumers and merchants both in New York and nationwide. Businesses depend on a robust fourth quarter to meet payrolls and operating expenses. The last thing businesses or consumers need is uncertainty in the marketplace.”

Berry continued, “We are very disappointed that [New York] Governor [Elliott] Spitzer and the New York Department of Taxation and Finance have just put forward a new directive attempting to require out-of-state sellers to collect sales tax on deliveries into New York State. This directive goes against the US Supreme Court’s landmark Quill decision, and thus would not survive legal scrutiny.”