I was optimistic when Eliot Spitzer was ousted from being Governor of New York that his plan to collect taxes for all Internet transactions by residents of New York would fizzle.
But it looks like his scandal plagued successor, David Paterson, wants to move forward with the proposal to require out-of-state companies to charge New York state and local sales taxes, which is not currently required by companies without a physical New York presence.
The New York Post reports that this move would raise an estimated $47 million for the state, according to projections from Spitzer’s plan.
However, it’s certainly not a done deal.
Critics and even some supporters expect legal challenges, citing a 1992 US Supreme Court ruling they say prohibits a state from forcing a company with no physical presence in a state from collecting the state’s sales tax.
Lawmakers and aides to Paterson and the legislative leaders yesterday were still trying to hammer out final details of the new spending plan, which is due by 11:59 p.m. tomorrow but will likely be a day or two late.
Anyhow, how does this impact affiliate marketers?
Well, the initial reasoning or excuse for the change was that having affiliates of an out of state company who live in New York would constitute a physical presence.
So maybe companies decide not to take on NY affiliates if the are a liability in this fashion?
That would be a shame, but it could be a reality to avoid having those taxes added, which would make it less attractive to transact with businesses like Amazon.com for the consumers.