Spitzer Kills Measure on Internet Taxation; 'Now Is Not the Time,' N.Y. Official Says

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Byline: Kara Rowland, THE WASHINGTON TIMES

New York Gov. Eliot Spitzer withdrew a proposal yesterday that would have forced some out-of-state online retailers to collect sales taxes from customers in New York.

The move came a day after Mr. Spitzer, a Democrat, scrapped an unpopular plan that would have allowed illegal aliens to obtain driver's licenses.

A memo issued last Friday by the state Department of Taxation and Finance would have required e-commerce companies doing business in the state to register as state vendors and collect sales taxes from New York customers, if those companies relied on a so-called "representative" within the state to make sales. The department defined a representative as a New York business that links to an out-of-state retailer's Web site or somehow refers people to the site.

"Governor Spitzer believes that now is not the time to be increasing sales taxes on New Yorkers," the state's budget director, Paul Francis, said yesterday. "He has directed the Department of Tax and Finance to pull back its interpretation that would require some Internet retailers that do not collect sales taxes to do so. …