New York Holiday Gift Guide: Online Shopping Taxes

Internet taxes will eat your savings and bring down the Web! OK, maybe not, but an article in the New York Sun this morning says that an initiative from New York Governer Eliot Spitzer's office could mean increased fees for N.Y. online shoppers.

States have been trying in vain for years to collect taxes on Internet shopping, but jurisdictional battles as well as a lack of enforcement resources have slowed the process.

New Yorkers have actually been required to declare online purchases on their personal income tax forms since 2003, but who actually does that? No one, apparently, because Spitzer's office recently released a memo reiterating that out-of-state retailers with online dealings with consumers or other businesses in New York need to fork over some tax dollars to the Empire State.





The memo does have two interesting caveats: The governor's office will forgive all past-due Internet taxes a company might owe if it registers with the state and starts collecting by December 7. The initiative also goes after retailing affiliates--smaller merchants who partner with online retailers like Amazon.com for a small commission. Participating in affiliate programs can be as simple as placing an icon on your Web site that links to Amazon, but under the Spitzer memo, if you're an affiliate who lives in or works out of New York, Amazon must collect taxes on purchases that originate from an affiliate clickthrough.

So what does this actually mean? Basically, New York, like most states, is having budget issues. I imagine the governor's office figures that some people will see the memo and actually register by December 7, thereby putting some money into its pockets. But given that this rule has been around since 2003 and nothing has been done to enforce it until now, I can't see this dampening your online holiday shopping schedule. Shop away, while you can.

UPDATE:The NYT City Blog reports that Spitzer is backpedaling and will not push the Internet tax issue. "Governor Spitzer believes that now is not the right time to be increasing sales taxes on New Yorkers," Paul Francis, the state budget director, said in a statement. You think?