Amazon.com has come out fighting against New York State Governor Eliot Spitzer's proposal to tax online sales.
The proposal is part of Spitzer's budget, requiring online retailers to charge sales taxes to New York residents. He expects it to raise $47 million in the first year.
The Supreme Court ruled in 1992 that sales taxes only applied to companies that maintain a physical presence within a state, which Amazon lacks in New York. However, under Spitzer's plan, the existence of Amazon affiliates from New York State whose Web sites link to Amazon and who get a cut of sales from there would qualify the company for inclusion.
State residents are now required to report their online purchases on tax returns according to an honor system, but the rate of noncompliance is high.
Word leaked out in November that the Spitzer administration planned to impose the tax, but Spitzer's office abruptly decided against imposing a sales tax just before Christmas.
