Web electronics site Newegg has sent an e-mail to customers saying that it will not comply with a controversial New York State law requiring Internet retailers to collect sales tax for purchases by state residents.

"After careful review and consideration, we are pleased to inform you that we have stopped collecting New York sales, effective Aug. 21, 2008," wrote Newegg spokesman Bernard Luthi in the e-mail, according to PC Magazine. "This decision was driven by your direct and candid feedback and our continued commitment to you as our valued customers."

However, he cautioned, "While Newegg no longer charges sales tax to its New York customers ... you may still have an obligation to pay New York State use tax on your purchases."

New York lawmakers included the new sales tax in a budget approved in April. Other Web retailers, such as Amazon and Overstock.com, have balked at the tax. Amazon filed suit against the New York State Department of Taxation and Finance saying the new tax is unconstitutional. While Amazon is headquartered in Seattle, it has affiliate sites in New York that link visitors back to Amazon.com and take a cut of the sales. Overstock says it has dropped its New York affiliates to avoid the sales tax charges.

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