Nassau County Comptroller Jack Schnirman has joined the chorus of local politicians and business owners calling on the state to implement a sales tax on out-of-state online vendors.
“New York State’s outdated tax laws have allowed an unfair playing field for our local businesses,” Schnirman said in a statement last week. “If the legislature is to return to Albany for a special session this fall, this item must be on the agenda.”
Under current law, online retailers are only required to collect sales tax from New York residents if the seller is located within the state.
Being essentially exempt from the tax, third-party retailers who sell through online marketplaces are able to offer lower prices for goods than local stores.
The sites where these transactions take place — such as Amazon — are already taxed through a state law passed in 2008 that requires major online retailers to collect sales tax.
But third-party retailers who use Amazon’s “marketplace,” a platform for online transactions between two parties, are not taxed. That puts brick-and-mortar stores at a disadvantage.
A Supreme Court case last month — South Dakota v. Wayfair Inc. — cleared legal roadblocks for attempts to collect the online sales tax.
The court ruled that internet retailers can be required to collect sales tax even in states where they have no physical presence, The New York Times reported.
According to the comptroller’s office, sales tax is the leading source of revenue for Nassau County. The tax generated $1.183 billion, or 39.5 percent of the major operating funds in the 2018 budget.
As the economy continues to grow stronger in Nassau — unemployment was 3.4 percent in May, the lowest in 11 years — so does the revenue collected from the sales tax. The comptroller’s office said that revenue from the tax for the first half of 2018 beat projections and was more than $22.6 million higher than the same period in 2017.
Schnirman is the latest Nassau County official who has called upon the state to act. The Nassau Council of Chambers of Commerce is pushing hard for the tax to be implemented on out-of-state businesses which they claim are hurting Nassau’s brick-and-mortar stores.
County Executive Laura Curran first called for the online sales tax to be implemented during a joint news conference with Suffolk County Executive Steve Bellone in March.
Curran released a statement last Monday reaffirming her support for the tax.
“The recent ruling by the Supreme Court has put the ability to collect sales tax from internet sales in the hands of the state and gives a tremendous boost of confidence to our local businesses that struggle to compete with internet commerce,” she said. “I look forward to working with Nassau County Comptroller Jack Schnirman and will continue to support Governor Cuomo’s efforts to collect internet sales tax in New York State and level the playing field.”
Despite the positive short-term outlook for the county, Schnirman warned that the cap on state and local tax deductions on federal tax returns could stymie further growth. This will, in turn, reduce revenue from the sales tax.
The comptroller’s office said the retail trade sector continues to be the largest sector in the county, with total sales topping $14 billion every year since 2013.
Reach reporter Luke Torrance by email at [email protected], by phone at 516-307-1045, ext. 214, or follow him on Twitter @LukeATorrance.