ALBANY - Days after the state Department of Taxation and Finance quietly issued a memo that would have required many out-of-state online companies to collect sales tax from New Yorkers, Gov. Eliot Spitzer reversed the plan.
“Governor Spitzer believes that now is not the right time to be increasing sales taxes on New Yorkers,” said Paul Francis, the state budget director, in a written statement. “He has directed the Department of Tax and Finance to pull back its interpretation that would require some Internet retailers that do not collect sales tax to do so.”
The original memo, issued Sunday, would have targeted companies that do online business in New York, but which don't have a brick and mortar presence in the state.
It would have required companies selling products online to register as New York state vendors and collect and report state and local sales taxes from customers who live here if the company has used an online agent or representative physically located in New York to make sales.
When someone located in New York state provides an online link for a product to an out-of-state site - like Seattle-based Amazon.com - and receives a commission, New York planned to consider that person a sales representative for the larger company.
State officials did not say how many businesses would be affected or how much tax revenue would be collected.
The state Department of Taxation and Finance said the memorandum's purpose was “to clarify current policy and does not reflect any change in requirements for vendors doing business in New York state.”
But Spitzer decided it was not the right move.
Francis said that when deciding to drop the clarification about online, out-of-state sales tax, the governor expressed concern about the approaching Christmas shopping season and the possibility that some people would consider the memo's directive to be a tax change, rather than an interpretation of existing law.
The decision came the same day Spitzer decided to abandon a plan to issue driver's licenses to illegal immigrants, but Francis said the tax decision had nothing to do with that issue, or the governor's flagging popularity.
“It's unrelated,” Frances said.
A Siena poll released Tuesday found just 41 percent of New York voters view Spitzer favorably - an all-time low for the governor who was elected with nearly 70 percent of the vote.
“Businesses depend on a robust fourth quarter to meet payrolls and operating expenses,” said Mark Micali, vice president of government affairs for the Direct Marketing Association.
“The last thing businesses or consumers need is uncertainty in the marketplace.”
The association advocates industry standards for responsible marketing. Micali described the initial idea as an “overreach of authority.”
Amazon.com currently charges state sales tax in North Dakota, Washington, Kentucky and Kansas, because the company has a physical presence in each state, spokeswoman Patty Smith said.
The company doesn't break down its sales on a state-by-state basis, Smith said.
Amazon.com officials declined to comment on the New York tax memorandum.
The deadline for online businesses to start taxing New Yorkers would have been Dec. 7.
No back taxes would have been assessed.
The original memo, issued Sunday, would have targeted companies that do online business in New York, but which don't have a brick and mortar presence in the state.
It would have required companies selling products online to register as New York state vendors and collect and report state and local sales taxes from customers who live here if the company has used an online agent or representative physically located in New York to make sales.
When someone located in New York state provides an online link for a product to an out-of-state site - like Seattle-based Amazon.com - and receives a commission, New York planned to consider that person a sales representative for the larger company.
State officials did not say how many businesses would be affected or how much tax revenue would be collected.
The state Department of Taxation and Finance said the memorandum's purpose was “to clarify current policy and does not reflect any change in requirements for vendors doing business in New York state.”
But Spitzer decided it was not the right move.
Francis said that when deciding to drop the clarification about online, out-of-state sales tax, the governor expressed concern about the approaching Christmas shopping season and the possibility that some people would consider the memo's directive to be a tax change, rather than an interpretation of existing law.
The decision came the same day Spitzer decided to abandon a plan to issue driver's licenses to illegal immigrants, but Francis said the tax decision had nothing to do with that issue, or the governor's flagging popularity.
“It's unrelated,” Frances said.
A Siena poll released Tuesday found just 41 percent of New York voters view Spitzer favorably - an all-time low for the governor who was elected with nearly 70 percent of the vote.
“Businesses depend on a robust fourth quarter to meet payrolls and operating expenses,” said Mark Micali, vice president of government affairs for the Direct Marketing Association.
“The last thing businesses or consumers need is uncertainty in the marketplace.”
The association advocates industry standards for responsible marketing. Micali described the initial idea as an “overreach of authority.”
Amazon.com currently charges state sales tax in North Dakota, Washington, Kentucky and Kansas, because the company has a physical presence in each state, spokeswoman Patty Smith said.
The company doesn't break down its sales on a state-by-state basis, Smith said.
Amazon.com officials declined to comment on the New York tax memorandum.
The deadline for online businesses to start taxing New Yorkers would have been Dec. 7.
No back taxes would have been assessed.
