ALBANY – Online retailers based outside New York state, such as Amazon.com, could face audits and bills for back taxes going back years unless they agree to start collecting sales tax for the state by June 1, The Post has learned.
A law adopted as part of the new state budget requires out-of-state online retailers to pay state and local sales taxes on purchases from New York.
Until now, Amazon.com and others have not done so, saying the tax law applies only to those online businesses with a physical presence in New York.
But the law requires out-of-state businesses to register with the state as vendors by June 1 for the purpose of collecting the taxes from New York customers.
Those that comply would be given amnesty from back audits, tax department spokesman Thomas Bergin said.
For those online retailers that don’t, tax officials say their books could be audited and back taxes sought for any New York sales.
Because the state claims the companies should have been collecting sales tax all along, tax officials believe their audits can go back as far as they want.
“We know that there are big Internet retailers out there who are not registered as vendors in New York but do sales in New York,” Bergin said.
“They’ll get letters saying if they register by June 1, you’re excused, we’re not coming after you. If you don’t, you can be subject to penalties and interest.
“There’s a bit of a carrot-and-stick approach to this thing.”
The law, the first of its kind in the country, is projected by state officials to generate $50 million in the current fiscal year and $73 million in the next.
Amazon.com representatives said they were reviewing the legislation and declined comment. They expect the state law to be challenged in court.
The state Business Council, which already opposed the notion of requiring the online companies to charge sales taxes, was incredulous that the state was now threatening back-tax audits.
“Albany invented the Amazon.com tax because they failed to cut spending,” the council’s Heather Briccetti said.
“As long as they don’t recognize the economic reality and continue to increase state spending, they’ll keep inventing new taxes like this one.”
Many lawmakers, including some who voted for the measure, have said they don’t expect it to hold up in court.
“The courts have been very reluctant to allow states to regulate Internet transactions, which has been a province of the federal government,” one Assembly Democrat said.