Since the dawn of US ecommerce, the question has been “to sales tax, or not to sales tax?”
Consumers and online retailers are squarely in the don’t-tax camp, while state governments, which stand to reap the tax dollars, are of a differing opinion. New York state has been trying to get out of state sellers, such as Amazon, to collect and pay state sales tax on transactions, which could reap hundreds of millions of dollars in annual revenue for the cash-strapped government (particular now that once-lucrative Wall Street revenues are fading fast).
The rule of thumb has long been that if the online seller has a bricks and mortar local presence in the state, e.g. Apple.com has local Apple stores, state tax is levied on online transactions. Amazon, as well as other online-only retailers such as Overstock.com, challenged New York’s attempt to get them to pony up 8.25 percent on all New York state transactions.
Yesterday, a NY State judge dismissed Amazon’s suit as groundless.