Amazon Fights Internet Tax Law

By Reuters  |  Posted 05-05-2008

Amazon.com has sued the state of New York, challenging a new statute requiring Internet retailers based elsewhere to collect New York sales taxes.

Amazon, the world's largest Internet retailer, said in a complaint filed in the Supreme Court of the State of New York on April 25 that the new law, passed by the state legislature in early April, was unconstitutional, vague and overly broad.

Through its "Associates Program," the company pays unaffiliated Web site operators around the country a commission if they advertise Amazon on their sites. Those ads often allow consumers to click through from the advertiser's Web site to Amazon.com.

The new law presumes that this amounts to solicitation of business in the state, a claim Amazon denies. Amazon has no "substantial" physical presence in the state, and independent advertisers are not authorized to act as Amazon's agents, according to the company's complaint.

Furthermore, Amazon claims the lawsuit unfairly singles out the company.

Seattle-based Amazon wants the law be declared invalid and to be awarded costs of the legal proceedings.

Besides newly appointed New York Governor David Paterson, Amazon also named the commissioner of New York's state department of taxation and finance as a defendant in the case.

Amazon.com said it had no further comment on the case.