Newegg Reverses New York Sales Tax Practice

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Newegg is taking a stand against New York’s sales tax law and has stop charging NY residents sales tax. It is nice to see online retailers take a stand like this and back their customers. Hopefully this sets a trend and other large retailers follow suit.

The move by Newegg reverses action the online retailer took in June, in which it began to charge applicable sales tax for all shipments to New York, following passage of a new state law that required certain companies to charge sales tax on shipments to New York state.
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What is the argument against paying sales tax? Personally, I hate big government so I am all for not paying taxes, but I don't understand the online situation - either you ought to pay in your state, or pay in the seller's state, or the seller should pay in his or her state.
 
Well another thing that I am sure has been gone over before is it is in Newegg's best interest to not have these customer's not have to pay sales tax. If people have to pay shipping AND sales tax that could encourage them to shop local. That would hurt Newegg quite a bit I would imagine. But then again I could be totally clueless. :D
 
Oops! I meant:

Well another thing that I am sure has been gone over before is it is in Newegg's best interest to have these customer's not have to pay sales tax.
 
There's this little thing called the Constitution and not allowing taxes/duties on items bought in another state...now if Newegg had a physical presence in NY, that's one thing, but since I bet they don't...
 
There's a BIG difference between Newegg's stance (leaving it up to NY residents to fulfill their legal obligation to pay sales tax on the purchases) and saying that NY residents no longer have to pay taxes on online purchases; all they're doing (and what Amazon's trying to do with their lawsuit) is not have the burden placed on them. If you look at the letter from Newegg linked in the linked article (http://consumerist.com/5040444/hooray-newegg-stops-collecting-new-york-sales-tax), Newegg clearly puts the burden back on the buyers to determine their own tax liability and pay accordingly.

Of course - without the seller collecting, odds of the individual paying are fairly slim...but there's no need to rehash that debate :D
 
Bill Clo said:
There's this little thing called the Constitution and not allowing taxes/duties on items bought in another state...now if Newegg had a physical presence in NY, that's one thing, but since I bet they don't...
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Ummm...you're wrong. NY can charge a use tax to its residents (and they do, along with many other states) on items purchased from out of state for use in NY. Essentially, it's the same as if they'd charged sales tax on the item (you pay the same rate), but just a matter of semantics. Use taxes have been in place a long time and are quite legal.

The Constitution clearly prohibits Congress from taxing "Articles exported from any State." States also are prohibited from taxing Imports or Exports (whatever that means). Congress itself is also not allowed to impose duties on goods that are not uniform across the States. Taxing the use of goods within a State is fair game, and is legally different from a sales tax. Amazon/Overstock/everyone else have not questioned the right of NY to collect taxes on the purchases; they're questioning the requirement of the seller to collect/remit the taxes when there's no physical presence in the state. That's all.
 
Bill Clo said:
There's this little thing called the Constitution and not allowing taxes/duties on items bought in another state...now if Newegg had a physical presence in NY, that's one thing, but since I bet they don't...
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Proof or it didn't happen.
 
On your NYS tax return, you are able to document your online purchases for the year and pay taxes at that time. Usually by that time, I don't have access to receipts and therefore can't accurately calculate any purchases I have made. I wouldn't want to misrepresent myself on my taxes but putting an amount I can't verify with receipts.
 
Oh, right, like the Constitution will hold up in court anymore, sheesh.

</extremely_heavy_dose_of_sarcasm_so_take_note>
 
Ladicius said:
They should stop charging sales tax in TN :D
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They have a warehouse there, sadly. :p

But anyway, yeah. It's bullshit that New York thinks it can legislate the rest of the country. It's up to New York and its citizens to manage their own taxes, not companies that do not operate within their jurisdiction.

Just like the New York Attorney General Mini McUseless threatening to sue ISPs that do not cease providing newsgroup access because newsgroups potentially have kiddy pr0n. So now many ISPs have stopped providing newsgroup access to anyone on their network, period, just because of what New York says...
 
My dad stopped buying from Newegg when they started charging the sales tax. This was after being a loyal customer for 7 years. He then started buying from Tigerdirect. I am glad newegg took a stand.
 
NKDietrich said:
Just like the New York Attorney General Mini McUseless threatening to sue ISPs that do not cease providing newsgroup access because newsgroups potentially have kiddy pr0n. So now many ISPs have stopped providing newsgroup access to anyone on their network, period, just because of what New York says...
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Because were the greatest state in the land, duh :p, were like 2 states.
 
I'm in NJ so i still get taxed by the egg... annoying, especially since back in the day when newegg didn't have a warehouse in NJ there was no tax either
 
Couldn't they win this argument based off the fact you are physically (or electronically) giving your money to newegg via california? So infact you are buying from them in california, which means it's like you are buying it from them there, but their other shipping facilities are located else where (ie: NY), so they shouldn't have to charge tax?

Or they just don't have a store front, so thus can't charge tax?

I dunno, just throwing ideas roughly what I think is why?
 
wiseoracle said:
Couldn't they win this argument based off the fact you are physically (or electronically) giving your money to newegg via california? So infact you are buying from them in california, which means it's like you are buying it from them there, but their other shipping facilities are located else where (ie: NY), so they shouldn't have to charge tax?

Or they just don't have a store front, so thus can't charge tax?

I dunno, just throwing ideas roughly what I think is why?
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The legal precedent is that if a merchant has a "physical nexus" (storefront, sales office, warehouse, shipping facility, etc.) in a State, that merchant is required to collect and remit sales taxes to the State per the State guidelines. Absent a physical nexus, the merchant is not required to collect and remit the sales tax; the burden is on the buyer to handle any taxation issues. Thus, if Newegg doesn't have a NY location, they are not obligated to collect sales taxes on sales made to NY residents; it is up to the residents of NY who buy things from Newegg to pay any applicable sales/use taxes.

NY is taking this interpretation, and expanding what is meant by "physical nexus." This particularly targets Amazon because NY is saying that having an affiliate in the state is a physical presence. Since Amazon has thousands upon thousands of affiliates (many of which are regular people who might generate a fraction of a fraction of a fraction of a percent of sales through links on their blogs, etc.), including many in NY, per NY's interpretation they have to now act as the State's agent and collect sales taxes. Having a banner ad on a website could also qualify as an "affiliate" type of relationship, which loosely ropes in everyone else.

I think NY is really full of it with this interpretation, and hopefully, the courts will agree they've gone too far. However, it is still a symptom of the disconnect between the analog sales tax system and a digital economy; the former needs to catch up to the latter and reach some level of uniformity to ensure cheap but effective compliance. Regardless, at the end of the day, none of this changes the resident's legal obligation to pay the tax; it just affects who bears the administrative responsibility for collecting it and the effectiveness of the collection efforts. (It's far easier to get Amazon to be responsible than millions of taxpayers.)
 
For NewEgg to stop charging NYers sales tax must mean that they eliminated their affiliations in NY.

If this becomes a trend and more companies pull out of NY, would this result in NY businesses suffering because of this law (such as lost advertisement revenue)?
 
SockMan! said:
For NewEgg to stop charging NYers sales tax must mean that they eliminated their affiliations in NY.

If this becomes a trend and more companies pull out of NY, would this result in NY businesses suffering because of this law (such as lost advertisement revenue)?
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It means that Newegg is disagreeing with NY's policy and choosing not to abide by terms it feels are not legally sound. For websites without an official "affiliate" program like Amazon has, NY's interpretation is REALLY stretching it thin. It's already thin enough in the case of Amazon.

One way or another, the courts will need to settle this (either from Amazon's lawsuit against NY or NY suing Newegg or others for noncompliance).
 
The only affiliation with NY that I remeber newegg having was their mail in rebate dept in niagra NY, but I guess they moved.
 
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