New York has e-tailers like Amazon collecting sales tax. Other revenue-strapped states may followJennifer Kahn usually began and ended her online shopping at one site: Amazon.con (AMZN). "I didn't think about it too much," says the Manhattan executive. But that changed on June 1, when the giant e-commerce outfit started collecting New York sales tax in response to changes in state law. When Kahn went to buy a mini-fridge recently, she ended up shopping around.
Savvy shoppers have long enjoyed a simple rule of thumb: buy from out-of-state e-tailers, save the tax. The Empire State is the first (and so far only) state to require online retailers to collect sales tax even when they have no "physical presence" in the state, such as a store, a warehouse, or even a sales rep. Amazon and rival Overstock.com (OSTK) say the law is unconstitutional, and each has filed suit against the state. "We've worked very hard not to become a tax collector," says an Overstock spokesperson.
They have reason to be nervous. More than a quarter of online users say that saving sales tax is a big reason for shopping online, according to Internet research firm Jupiter. (Come tax time, consumers are supposed to pay the tax themselves—but few do.)
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