MORE TAXES FOR NEW YORKERS

N.Y. Orders Large Web Retailers To Charge Tax
State Estimates New Rule Will Bring In $50 Million In 2008

ReportingTony Aiello NEW YORK (CBS) ― New York Internet shoppers, take note: in five weeks, sales tax-free shopping will end on many Web sites thanks to rewritten state rules that are trying to force Internet retailers to collect. At Chrono Tech Watches in White Plains, Jerry Nally is glad the clock is ticking on many Internet retailers that don't charge New York sales tax. Nally says those so-called "e-tailers" steal his customers. "They'll come in our store, look at our product, touch it, play with it, look at the warranties, then go back to the web and buy it tax free," says Nally.

For years, retailers with "brick and mortar" stores in New York, such as Wal-Mart, have charged sales tax on orders placed through their Web sites. Yet Amazon.com and other e-tailers with no physical stores have not charged the tax, much to the delight of Internet bargain hunters, like online shopper April Cantin. "Coming here, you have to pay a lot of tax, when you pay on line, you pay nothing, just shipping and handling and the item," she says. In the midst of a budget crisis, New York is now telling Amazon and certain other large Internet-only vendors they must collect state and local sales tax -- if they allow sales via "click-throughs" from New York-based Web sites. The new rule is set to go into effect on June 1.

The state estimates this new Internet tax will bring in $50 million this year and $75 million next year. The Retail Council Of New York State hopes the new rule is the first step toward collecting sales taxes on all Internet commerce. But the new rulings aren't sitting well with the Internet giants. Amazon, the largest Internet retailer, is objecting to the decision, saying "this is the wrong time to increase taxes on New Yorkers." "You will drive people away. People are not going to want to shop online anymore," says Cantin.