Spitzer's Attempted Tax Grab Could Affect Other States

Apparently,  you won't be reading this today in the New York Times or other MSM. A YahooNews search this morning returns only a single hit in the first 50 returns.

But reported by Joseph Goldstein in the New York Sun today New Yorkers going Christmas shopping online at Amazon.com will find an 8.375% surprise at the virtual cash register, courtesy of Governor Spitzer, who is moving aggressively to collect Internet sales taxes that have gone widely unenforced. NY Governor Eliot Spitzer's voracious appetite for revenue-raising (by extortionate fines and coerced settlement payments when he was Attorney General) has now been channeled into desperate attempts to raise taxes despite his campaign promises to the contrary.
New Yorkers going Christmas shopping online at Amazon.com will find an 8.375% surprise at the virtual cash register, courtesy of Governor Spitzer, who is moving aggressively to collect Internet sales taxes that have gone widely unenforced.

Under a new policy, major electronic retailers, such as Amazon.com, will be required to collect sales tax on all purchases from New York. The policy, based on a novel legal theory, could hasten the end of the Internet's era as a duty-free marketplace if other states follow New York's lead. With the policy, New York immediately took the lead among states that are seeking to tax online commerce.

"I'd say this puts us at the front," one state tax official, who requested anonymity, told The New York Sun.

Having pledged not to raise taxes, Mr. Spitzer is increasingly scrounging for ways to close a projected $4.3 billion deficit next year. State officials estimate that this latest initiative, which goes into effect in December, will bring in about $100 million more each year, split between state and local government tax revenue. Statewide, the sales tax averages about 8%, although in New York City it is 8.375%.
Such a move would be in direct defiance of the letter and principle of the National Bellas Hess decision rendered by the United State Supreme Court in 1967, and which has been the law of the land ever since. Simply put, the ruling provided that, unless a company had a physical nexus in a particular state other than its own, e.g. brick and mortar offices or sales outlets, sales reps, etc. it could not be required to collect and remit sales taxes on behalf of other states from sales made to residents of those states by mail order or phone.

In the present attempt, as describe by The Sun, Spitzer is attempting a huge stretch to include within that definition of a physical presence the use of click-through links to such sellers as Amazon.com on Web sites whose owners are in New York State, a common practice for site operators in many states throughout the country.

Under this theory, a small site operator who carries a click-through ad for Amazon or other merchants would cause users of the click-through who make a purchase from the linked-to site to be liable for their own local sales taxes -- a situation which does not obtain now under reasonable current interpretations of the law.

Furthermore, the New York AG's attempt at a tax grab introduces the complicating question of just how one state, in this case New York, can enforce its sales tax collections and remittances on another sovereign state. To make matters worse, should the twisted logic of Spitzer's tax greed somehow be found acceptable to the US Supreme Court, it would, presumably apply to all 50 states. This raises the frightening specter of demands for corporate records of states' domestic corporations to be opened to "foreign" states -- and even the possibility of maintaining "spies" in one state to investigate the Internet transactions of its citizens in another.

Citizens of high sales-tax states, be alert!

This prospect is highly reminiscent of the Gestapo-like tactics of New York sales tax authorities monitoring the license plates of autos parked in a New Jersey Ikea parking lot, by means of which they tried to trace the purchasing in New Jersey of furniture by New Yorkers to take advantage of the NJ sales-tax-free zone created for the Ikea store.

This tax ploy is only the latest of Spitzer's efforts to circumvent due process and/or laws not to his liking -- most recently exemplified by his extremely unpopular proposal to hand out driver's licenses to illegal aliens and his illegal attempts to use the State Police to embarrass his Republican nemesis, State Senate Majority Leader Joe Bruno.

Spitzer's megalomaniac predilections were well known to the voters of New York, who elected him by a resounding margin anyway. What goes around comes around, and it cannot be said that anyone who pulled the Spitzer lever in the voting booth hasn't reaped what he or she sowed.
Apparently,  you won't be reading this today in the New York Times or other MSM. A YahooNews search this morning returns only a single hit in the first 50 returns.

But reported by Joseph Goldstein in the New York Sun today New Yorkers going Christmas shopping online at Amazon.com will find an 8.375% surprise at the virtual cash register, courtesy of Governor Spitzer, who is moving aggressively to collect Internet sales taxes that have gone widely unenforced. NY Governor Eliot Spitzer's voracious appetite for revenue-raising (by extortionate fines and coerced settlement payments when he was Attorney General) has now been channeled into desperate attempts to raise taxes despite his campaign promises to the contrary.
New Yorkers going Christmas shopping online at Amazon.com will find an 8.375% surprise at the virtual cash register, courtesy of Governor Spitzer, who is moving aggressively to collect Internet sales taxes that have gone widely unenforced.

Under a new policy, major electronic retailers, such as Amazon.com, will be required to collect sales tax on all purchases from New York. The policy, based on a novel legal theory, could hasten the end of the Internet's era as a duty-free marketplace if other states follow New York's lead. With the policy, New York immediately took the lead among states that are seeking to tax online commerce.

"I'd say this puts us at the front," one state tax official, who requested anonymity, told The New York Sun.

Having pledged not to raise taxes, Mr. Spitzer is increasingly scrounging for ways to close a projected $4.3 billion deficit next year. State officials estimate that this latest initiative, which goes into effect in December, will bring in about $100 million more each year, split between state and local government tax revenue. Statewide, the sales tax averages about 8%, although in New York City it is 8.375%.
Such a move would be in direct defiance of the letter and principle of the National Bellas Hess decision rendered by the United State Supreme Court in 1967, and which has been the law of the land ever since. Simply put, the ruling provided that, unless a company had a physical nexus in a particular state other than its own, e.g. brick and mortar offices or sales outlets, sales reps, etc. it could not be required to collect and remit sales taxes on behalf of other states from sales made to residents of those states by mail order or phone.

In the present attempt, as describe by The Sun, Spitzer is attempting a huge stretch to include within that definition of a physical presence the use of click-through links to such sellers as Amazon.com on Web sites whose owners are in New York State, a common practice for site operators in many states throughout the country.

Under this theory, a small site operator who carries a click-through ad for Amazon or other merchants would cause users of the click-through who make a purchase from the linked-to site to be liable for their own local sales taxes -- a situation which does not obtain now under reasonable current interpretations of the law.

Furthermore, the New York AG's attempt at a tax grab introduces the complicating question of just how one state, in this case New York, can enforce its sales tax collections and remittances on another sovereign state. To make matters worse, should the twisted logic of Spitzer's tax greed somehow be found acceptable to the US Supreme Court, it would, presumably apply to all 50 states. This raises the frightening specter of demands for corporate records of states' domestic corporations to be opened to "foreign" states -- and even the possibility of maintaining "spies" in one state to investigate the Internet transactions of its citizens in another.

Citizens of high sales-tax states, be alert!

This prospect is highly reminiscent of the Gestapo-like tactics of New York sales tax authorities monitoring the license plates of autos parked in a New Jersey Ikea parking lot, by means of which they tried to trace the purchasing in New Jersey of furniture by New Yorkers to take advantage of the NJ sales-tax-free zone created for the Ikea store.

This tax ploy is only the latest of Spitzer's efforts to circumvent due process and/or laws not to his liking -- most recently exemplified by his extremely unpopular proposal to hand out driver's licenses to illegal aliens and his illegal attempts to use the State Police to embarrass his Republican nemesis, State Senate Majority Leader Joe Bruno.

Spitzer's megalomaniac predilections were well known to the voters of New York, who elected him by a resounding margin anyway. What goes around comes around, and it cannot be said that anyone who pulled the Spitzer lever in the voting booth hasn't reaped what he or she sowed.