Spitzer Backs Off on Internet Tax Plan Too

ALBANY, N.Y. (AP) -- The Spitzer administration has backed away from a plan to require many out-of-state retailers to collect sales tax from New Yorkers who buy their products online.

Paul Francis, Spitzer's budget director, says the governor this week instructed the Department of Tax and Finance to "pull back" its interpretation that would have required some Internet retailers that do not collect sales tax in New York to do so.

The department on Sunday issued a memo saying that many companies that do online business in New York but don't have stores in the state should collect sales taxes.

State tax officials say the idea was to "to clarify current policy."

Francis says the governor was concerned that some might consider the memo's directive to be a tax change rather than an interpretation of existing law.

The tax policy reversal came yesterday, the same day Spitzer -- whose approval ratings have been plummeting -- abandoned his politically unpopular plan to issue driver's licenses to illegal immigrants.