Amazon.com Asks Court To Repeal New York's Online Sales Tax Law

New York, NY (AHN) - Online retail giant Amazon.com has sued the state of New York seeking the repeal of a law requiring the firm to collect sales tax on purchases shipped to New Yorkers.

In its lawsuit filed on April 25 with the New York State Supreme Court in Manhattan, Amazon contends that the law enacted on April 9 as part of the state's budget is invalid, illegal and unconstitutional.

The law requires some online retailers to collect and remit 8.375 percent sales tax on purchases by New York residents made through retailers' affiliates in the state. The law includes sales force or Web site operators in its definition of online retailer affiliates.

However, the Seattle, Washington-based company considers affiliates as resident advertisers who "indirectly" refer customers to its product pages in exchange for commissions and are not physically present in New York State. According to Internetnews.com, Amazon cited a 1992 court ruling requiring a retailer's "physical presence" within the state in order to be responsible for collecting sales taxes.

Amazon also argued it has no way of verifying which of the thousands of Web sites are based in New York or operated by legal residents of the state.