An article in today’s Wall Street Journal notes that NY Governor David Paterson has revived former Gov. Spitzer’s controversial plan to collect sales tax from out of state online retailers. The provision, included in the current budget, is expected to raise $70m.
The article notes:
A 1992 Supreme Court decision called Quill bars exactly this type of money grab. The Supremes ruled that forcing such obligations on companies with no employees or buildings in a state could cripple interstate commerce. Without Quill, small Web merchants would have to answer to 7,500 state and local tax collectors.
The Governor apparently believes he can get to companies like Amazon through New Yorkers who run ads for Amazon on their Web sites. In fact, if nonemployees with some business relationship with a company were enough to establish physical presence, then Quill would essentially be meaningless.
The courts may well ax the Paterson tax on these grounds. But until they do, some companies will feel pressure to pay instead of doing battle with a state government.