A Supreme Court ruling last week has given a boost to local politicians and businesses, who are pushing the state Legislature to implement a sales tax on online retailers.
In its decision in South Dakota v. Wayfair Inc., the Supreme 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.
“New York state and many states were missing out on the sales tax from third-party providers,” said Francesca Carlow, the president of the Nassau Council of Chambers of Commerce. “Although consumers love not paying it, in the long run it is a detriment to the state and quality of life.”
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. Carlow said this placed brick-and-mortar stores at a disadvantage, as the lack of a sales tax allows online retailers to undercut them.
“The customers will come in… and do all the research in the store, and then they’ll whip out their smartphone and buy online,” she said. “If there is even a $5 difference, they’re opting to buy online.”
In March, Nassau County Executive Laura Curran and Suffolk County Executive Steve Bellone held a news conference in Lindenhurst to encourage the state Senate to pass a law that would collect this tax.
Curran released a statement following the Supreme Court’s decision in which she restated her support.
“The ruling today 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 local businesses that struggle to compete with internet commerce,” she said. “We will continue to support Gov. Cuomo’s efforts to collect internet sales tax in New York State and level the playing field.”
The Cuomo administration proposed the Internet Fairness and Conformity Act earlier this year to tax these out-of-state retailers, but it was not included in the state budget. Efforts to reach the Cuomo administration for comment, as well as state Sen. Elaine Phillips, were unavailing.
A letter from the New York State Association of Counties predicted that $275 million in state and local taxes would be collected in the first year.
Carlow was unaware of the status of such a bill in Albany, but said state lawmakers must implement the tax.
“They always say that small businesses are the economic engine,” she said. “Right now we need some gas, and we’re looking to our elected officials to get this done.”
Reach reporter Luke Torrance by email at firstname.lastname@example.org, by phone at 516-307-1045, ext. 214, or follow him on Twitter @LukeATorrance.