Filed under: Business, News, Web services, web 2.0
At the beginning of the summer, a new sales tax law went into effect in New York State, requiring online retailers who have some sort of presence in the state (like shipping centers or affiliate programs) to charge sales tax on any item shipped to New York residents. Big e-tailers like Amazon.com and Newegg complied with the new law, although Amazon is still suing the state of New York, claiming the tax law is unconstitutional.Today, Newegg, a favorite shop amongst Download Squad's staff, has decided to stop collecting those taxes. According to PC Magazine, Newegg wrote an e-mail to customers, explaining, "After careful review and consideration, we are pleased to inform you that we have stopped collecting New York sales tax, effective August 21, 2008."
Although Newegg will no longer be charging sales tax on orders shipped to New York, New York residents may still be required to pay sales tax for those purchases (usually when filing annual income tax statements). Much of the rationale for the tax bill in the first place, as I understand it, was to force businesses to do what residents were not doing: paying sales tax on online goods ordered from out-of-state.
It will be interesting to see if Newegg's decision has any trickle-down effect on any other shops that are currently complying with the law. Although I can't see Amazon following suite -- that could potentially harm its legal case -- perhaps retailers like Overstock.com, which temporarily suspended affiliate-agreements with New York residents as a way of avoiding the tax issue, will re-evaluate the situation.
In wake of the 
