Feeds

Overstock and Patrick Byrne sue New York over Amazon Tax

Just like Amazon

Boost IT visibility and business value

New York's new online tax law is now facing lawsuits from two big-name online retailers.

A month ago, Amazon sued that Empire State over its so-called Amazon Tax, and on Friday, cut-rate e-tailer Overstock.com filed its own suit, reiterating that the Amazon Tax affects more than just Amazon.

Under Governor David Patterson's new $122bn budget, online retailers with New York-based affiliate marketers are considered to have a "physical presence" in the state, and that means they're required to collect and remit sales taxes from New York-based shoppers.

The new legislation took effect yesterday. Amazon has agreed to collect the tax while its lawsuit plays out, but Overstock has not. Before filing its suit, the Utah-based outfit severed ties with approximately 3,400 New York affiliates. As CEO Patrick Byrne told us, his Utah-based outfit can't afford to collect those extra dollars.

"We had two choices: Either raise our prices to New York residents or give up our New York affiliate business," he said. "And since our affiliates make up such a small fraction of our business, cutting affiliates made the most sense.

"Suddenly having to pay [roughly] 8 per cent tax on 10 per cent of our sales would be a really bad trade off."

Overstock also told us that in cutting affiliates loose, it was "sending a message" to New York lawmakers. But it sent a much larger message on Friday. Like Amazon's suit before it, Overstock's complaint insists that Governor Patterson's legislation is illegal under both the New York and US constitutions.

A 1992 US Supreme Court decisions says that retailers needn't collect sales tax unless they have a physical presence in the state where the customer resides. Otherwise, customers are required to declare the tax on their. But few do.

Neither Amazon nor Overstock maintain warehouses or offices in the Empire State. But you can bet that both make an awful lot of money there. And if they're required to collect sales tax, they'd both make less. Shoppers will be more likely to shop elsewhere. ®

Maximizing your infrastructure through virtualization

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Stick a 4K in them: Super high-res TVs are DONE
4,000 pixels is niche now... Don't say we didn't warn you
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
Sonos AXES support for Apple's iOS4 and 5
Want to use your iThing? You can't - it's too old
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Too many IT conferences to cover? MICROSOFT to the RESCUE!
Yet more word of cuts emerges from Redmond
Joe Average isn't worth $10 a year to Mark Zuckerberg
The Social Network deflates the PC resurgence with mobile-only usage prediction
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Securing Web Applications Made Simple and Scalable
Learn how automated security testing can provide a simple and scalable way to protect your web applications.