New York's Battle for Owed Taxes.
New York State legislators have approved a bill that requires large online stores to collect sales tax for anything shipped to New York. Even when sales tax is not collected by the seller, “use tax” is required every time a New Yorker makes a purchase. As elsewhere, few buyers are aware of this requirement, let alone report and pay the tax. The new law will transfer the burden from the consumer to certain retailers – like Amazon.com – through the argument that they do business in New York State through its network of affiliates, and in so doing is expected to raise $50 million this fiscal year.
The Quill Decision
Preventing New York from requiring sales tax to be collected for all sales into New York, whether the seller is based in New York or out-of-state, is the 1992 Quill vs North Dakota U.S. Supreme Court decision. Under Quill, the Supreme Court determined that out-of-state retailers cannot be required to collect sales tax on purchases sent to states where they do not have a physical presence, reasoning that requiring businesses to adhere to the complexities of the state and local tax codes would place an unreasonable burden on interstate commerce. By asserting that internet companies’ affiliates constitute a physical presence in its state, New York legislators are taking an aggressive stance to sidestep the barrier to collecting tax that Quill represents.
Each state has a homegrown tax system with differing rates, definitions and applications. 30 don't tax food, 11 exempt nonprescription drugs, and five don't collect sales tax. What one state considers food, another may tax as candy. Some states base taxes on where shipments originate, others on destination. Different rates and rules for 11,000-plus local jurisdictions add another dimension of complexity to the mix.
With SpeedTax, you don't have to track the thousands of rule and rate changes that go into effect every year in New York State and across the U.S. Its sales tax automation and management solution, SpeedTax MANAGER™, includes a central repository of current U.S. sales tax rules, rates and jurisdictions, and by linking to any accounting application or shopping cart during invoicing, calculations are automatic and accurate every time – with a minimal administrative burden or expense to the business. Contact SpeedTax to find out more.
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