New York throws a spanner into Internet commerce

The state of New York now says that if an Internet retailer has an affiliate in New York, the Internet retailer must pay New York sales tax on all its sales in that state.

By “affiliate,” New York means having anyone who is able to sell products through your Web site. Companies like Amazon, eBay and Overstock have lots of local affiliates throughout the country, and indeed the world.

Legal and technology analyst Lisa Morgan (pictured), blogs that “New York Tax Law Angers Retailers, Hurts Affiliates.” She says that,

New York’s recent action is already resulting in a chain reaction on both business and legal fronts, and quite frankly the debate is necessary. It’s not the broad federal tax Internet purists have been fighting for years; however, it is a bold step in a very controversial direction.

This type of unilateral action by New York is exactly why the Federal government is constitutionally mandated to regulate interstate commerce. Let’s hope the Feds manage to overturn this New York law… and do so quickly.