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New York State legislators have approved a bill that will require online retailers to begin collecting sales taxes on purchases shipped to the state even if they have no brick and mortar presence. Governor David Paterson is expected to approve it. The new bill is called the “Amazon Tax” and it closes a loophole for online retailers who get sales through affiliate programs. A lobbying group representing local retailers argued that the previous exemption created an unfair advantage for online retailers.

“This is a first step—but a critical one—in our ongoing battle to level the sales tax playing field between New York retailers and the out-of-state Internet giants that have, for years, capitalized on an unfair and unintended competitive advantage driven solely by tax policy,” James Sherin, president CEO of the Retail Council New York, said in a statement reacting to the bill’s passage.

While there will inevitably be challenges brought by online retailers, New York expects the new bill to generate $50 million in new revenue this year.

Read [InternetNews]