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Amazon Loses NY Case; PMA Continues Push for Federal Law

Amazon Loses NY Case; PMA Continues Push for Federal Law

Earlier today the New York State Court of Appeals ruled that Amazon and other out-of-state online retailers must collect state sales tax on purchases made by New York State customers.

The case, which combined two law suits brought by Amazon.com and Overstock.com, was decided 4-1 by the New York State Court of Appeals nearly five years after the passage of the law in New York State.

Over the last 5 years, eight other states have passed legislation similar to New York’s, requiring out-of-state retailers to collect sales tax even when they do not have a physical presence in the state using affiliate marketers as the basis for nexus.

However, similar bills have been beaten back in over 2 dozen states during the same period. In June of 2011, the Performance Marketing Association sued the state of Illinois over passage of a similar Affiliate Nexus Tax Bill, calling the law unconstitutional.  The PMA won the suit, but the case is currently pending in the appeals process.

According to PMA Executive Director, Rebecca Madigan, “The Amazon vs. New York ruling doesn’t resolve the practical problem that existed all along: advertisers sever their agreements with in-state marketers when these types of laws pass, to avoid the burden of tax collection. As a result, the states generate no new sales tax revenue, and thousands of small internet businesses get wiped out in the process. So far, 76,000 of these small online businesses have been devastated.”

Meanwhile, the PMA is supporting passage of  federal legislation, which was introduced to Congress last month.

“The PMA believes the only way to solve this problem of sales tax collection on Internet sales is via federal legislation. The Marketplace Fairness Act (Enzi, Durbin and Alexander) was just given a vote of confidence by the US Senate,” Madigan says. “The bill has had strong bipartisan support in the House and Senate, and we are hopeful it will pass in 2013. The MFA truly levels the playing field for all brick-and-mortar and Internet retailers, and is the only solution that allows our small internet companies to resume their businesses in states where similar laws have passed.”

Help the PMA continue its fight by contributing to the Performance Marketing Fairness Fund.

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Lisa Picarille

Online Content Strategist at LisaPicarille.com
Lisa Picarille is an online content strategist focusing on digital marketing, branding, and social media for performance marketing companies. She is the former Content Director for the PMA and teaches Internet Marketing at USF Online. An award-winning journalist, Lisa headed the news departments of Wired.com, TechWeb.com, TechTV.com and CRN.com and wrote for Rolling Stone, CRM Magazine, PCWeek, MacWeek, Computerworld and InfoWorld. Lisa has 3 awards for Performance Marketing Advocacy.

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