The Freedom Files
columnist: RS Davis

The companies say the so-called "Amazon Tax" unfairly targets some companies, violating the equal protection clause of the U.S. Constitution and contradicting a 1992 Supreme Court ruling in Quill Corp. v. North Dakota.

(...)

The change clearly is unconstitutional, says Kristina Rasmussen, director of government affairs for the National Taxpayers Union.

"In 1992 the Supreme Court ruled that 'remote sellers'--at that time, mail-order firms--didn't have to collect taxes on purchases made by inhabitants of states where the businesses had no 'bricks-and-mortar' establishments," Rasmussen noted.

Press liaison Jeffrey Gordon rejected that argument, asserting with an amazing contortion of logic that it was certainly constitutional: "New York enacted a requirement that Amazon and others begin collecting sales tax on the basis of Amazon having established a presence in New York State by using in-state affiliates that are encouraging sales through Amazon by linking to its site."

In other words, those affilliate programs that pay you a small commission for referring buyers to online retailers (I used it myself on my old website) is beng used as away for them to say that these online retailers have a physical presence in the state. 

Bricks and mortar by proxy, eh? By that logic, any business that  links to retailers on the internet in New York would subject the website to this circuitous logic that only a politician could love. I can definitely see that if this trend were to continue, a de facto internet embargo on New York could spontaneously emerge.

In fact, Overstock has already discontinued their affiliate program in New York, saying "We now believe it prudent to discontinue, temporarily, our current relationships with our New York affiliates while the battle over the constitutionality of the New York legislation is contested in the courts."

The state didn't try this on the old mail order businesses, presumably becuase it really wasn't worth it, but with internet sales always on the rise, the lure of big money has a way of bringing out the extortionists in government.  And this law stands to bring in $50 million a year for these wannabe mafioso. 

That explains why when the New York senate resoundingly passed a repeal of the bill, it was completely ignored. Now that the legislative session for the year is over, the bill doesn't have much hope. So, the smaller online retailers have all their hopes tied up in the lawsuits by Amazon and Overstock.

Except one. InternetNews.com reports that one company is showing their huge, brass bollocks by openly flouting the law:

Newegg, a Web-only merchant that sells computers, accessories and consumer electronics products, has reversed its policy of collecting sales tax on New York purchases, the company confirmed.

When the law took effect June 1, Newegg began collecting the tax like other retailers. It was not immediately clear what prompted the change, and company spokespeople did not respond to requests for comment...

...On the policy page of its Web site, Newegg states that, "Sales tax is only required for orders shipping into states where we have or may have nexus for state tax purposes under applicable laws."

 I'm not sure how well this is going to go over, but the lawsuits may make it moot.  In the end, this may just be another way of presenting a test case for constitutionality.  But if the courts uphold New Yorks scam as constitutional, they could be in for the same kind of multi-million dollar lesson that Wesley Snipes learned:

Don't mess with the government.

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