Amzaon.com sued the state of New York, challenging it for the new statute that requires Internet retailers based outside New York to collect New York sales taxes.

The Internet retailer formally filed the complaint in the Supreme Court of the State of New York on April 25 alleging that the new law that had been passed by the state legislature in early April was unconstitutional and overly broad.

Amazon currently pays unaffiliated Web site operators around the United States, through its Associates Program, a commission if they advertise Amazon on their sites.

The adverts often allow consumers to click through from the advertiser's Web site to Amazon.com.

The new law that was passed in April presumes that Amazon's Associates Program is equivalent to solicitation of business in the state but Amazon denied the claim saying it had no substantial physical presence in New York State, and that independent advertisers were not allowed to act as Amazon's agents.

The Seattle based Internet retail giant wants the law to be declared invalid and to be awarded costs of the legal proceedings.

New York Governor, David Paterson and the commissioner of New York state department of taxation and finance were named by the firm as its defendant in the case.

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