Amazon.com, LLC v New York State Dept. of Taxation & Fin., 2010 NY Slip Op

Amazon.com, LLC v New York State Dept. of Taxation & Fin., 2010 NY Slip Op

Plaintiff on-line retailers (OLRs) appealed a judgment of the Supreme Court, New York County (New York), which dismissed their complaints, seeking a declaratory judgment that challenged the constitutionality of Tax Law § 1101(b)(8)(vi), as amended on April 23, 2008, on commerce clause, due process, and equal protection grounds.

The amendment to § 1101(b)(8)(vi) required the OLRs to collect a sales and use tax on purchases made by New York residents. The trial court granted dismissal of the complaints under CPLR 3211(a)(2) and (7). On appeal, the court found that the facial challenges failed to state a cause of action. The court found no validity to a facial challenge based on the Commerce Clause under U.S. Const. art. I, § 8(3), as the tax collection obligation was only imposed on an out-of-state vendor where it entered into a business-referral agreement with a New York State resident, and only when that resident received a commission based on a sale in New York. Accordingly, the nexus requirement was satisfied. Due process facial challenges also failed, as the presumption created was not irrational and irrebuttable, and § 1101(b)(8)(vi) was not void for vagueness with respect to various terms used therein. The as-applied challenges were ripe for review. However, issues of fact existed as to some of the as-applied challenges, including under the commerce and due process clauses. There was no showing of a viable equal protection claim under U.S. Const. amend. XIV.

The court modified the trial court judgment by declaring the statute constitutional on its face, and constitutional on its face and as applied with respect to the Equal Protection Clause. The matter was remanded for further proceedings with respect to the as-applied challenges under the due process and commerce clauses. The remainder of the trial court judgment was affirmed. Amazon.com, LLC v New York State Dept. of Taxation & Fin., 2010 NY Slip Op.

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