Back in mid-April, we wrote about a new Bill that was signed in New York called the “Amazon Tax Bill.” It forces retailers to charge sales tax to customers who live in the state of New York which then provides the state with an extra $50 million in revenue. We mentioned at the time that if ever there was a way to kill online retailers, this could be it. Clearly the people living in New York aren’t too happy (even though they are supposed to pay sales tax on items purchased from out of the state anyways), but retailers like Amazon aren’t too happy either. In fact, Amazon has decided to fight New York on this bill.
Despite the fact that the bill is named after Amazon.com, it doesn’t mean they are the only ones required to follow it. Now Newegg, a favorite store among geeks for purchasing computer hardware and software, has joined Amazon in charging taxes in New York. Recently, their customers living in the state received the following letter:
Important Message to Our New York Customers
May 23, 2008
Dear Valued Newegg Customer,
As a result of recent changes in the State of New York Tax Law requiring certain out-of-state retailers to collect and remit sales taxes to the State of New York, we regrettably inform you that Newegg.com must begin collecting applicable state and local sales tax for all orders shipped to New York addresses on or after June 1, 2008.
Qualified business customers can continue to use the Newegg.com Sales Tax Exempt Form.
We value our relationship with you and all of our New York customers. We apologize for any inconvenience caused by this change in New York law and assure you that we will continue to work hard to offer you the best prices, fastest shipping and award winning customer service you deserve.
We look forward to continuing to provide you with the premier online shopping experience for all of your IT and Consumer Electronics needs.
Eventually all online retailers using affiliates in the state will have to comply, so slowly but surely, we’ll start seeing other retailers sending out similar letters to their customers. The only way to “get out of it” would be to drop their New York based affiliates because it’s the affiliates, according to New York Government, that give retailers a “physical presence” in the state. Now that this bill is being enforced in New York, it’ll only be a matter of time before other states will follow in their footsteps. What state wouldn’t want several extra million in revenue?