Supreme Court Refuses to Hear New York Amazon Tax Case

Supreme Court Refuses to Hear New York Amazon Tax Case

 by Korey Clark

On the same day that consumers were making Cyber Monday the busiest online shopping day in history (see Bird's eye view), the U.S. Supreme Court denied petitions from Amazon and Overstock to review a case from New York's highest court upholding that state's 2008 law requiring online retailers with affiliates in the state to collect sales taxes. 
New York's Court of Appeals ruled that an online retailer's relationship with third-party affiliates in the state that are paid commissions for sending Web traffic the retailer's way constitutes a "substantial nexus" obligating the retailer to collect taxes in the state. Twenty years ago the U.S. Supreme Court ruled in Quill v. North Dakota that a state could only tax an out-of-state retailer when the retailer had a "substantial nexus" in the state, which the court stipulated was a "physical presence" in the state. But with that decision having come before the online shopping revolution, the New York court said the standard it established might be outdated. 
New York State Attorney General Eric T. Schneiderman (D) was pleased the high court opted to stay out of the issue now. 
"Today's Supreme Court decision validates New York's efforts to treat both online and brick-and-mortar retailers equally and fairly, by requiring all retailers with a presence in our state to collect sales taxes," he said in a statement. 
But David C. Blum, a Chicago tax lawyer who represents both online and brick-and-morter businesses, said the high court's action will only create more pressure for a national solution on the issue. 
"The failure of the court to take and decide this case will create an additional burden on interstate commerce since the line between a physical and virtual presence will only continue to blur," he said. "We can only hope that the court will take other similar cases in the near future" to resolve the issue. 
Amazon, meanwhile, said in a statement that the Supreme Court had already addressed the issue in Quill, saying that "Congress can and should act to resolve it." 
"The Marketplace Fairness Act now pending before Congress would protect states' rights to make their own revenue policy choices while allowing them to collect more than a fraction of the revenue that's already owed," Amazon said. 
The U.S. Senate passed that act, which would require companies with over $1 million in Internet sales outside their home states to collect sales taxes in every state. But the measure's future is uncertain in the House, with some Republicans maintaining it would constitute a tax increase for their constituents. (WASHINGTON POST) 

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