Online out-of-state purchases subject to sales tax
New York’s highest court ruled Thursday the state can collect sales tax from out-of-state retailers, rejecting claims by Amazon.com and Overstock.com that the tax law violates the U.S. Constitution’s Commerce Clause.
The Court of Appeals said in a 4-1 ruling that the 2008 amendment meets the U.S. Supreme Court test that the sellers have “a substantial nexus” with the taxing state. Taxes apply when the online retailers generate at least $10,000 in annual sales to New Yorkers from in-state websites that earn commissions by bringing in potential customers through links to the big retailers.
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Amazon.com, with corporate offices in Washington state, has an “Associates Program” where others put such links on their websites. Overstock.com, based in Utah, suspended its similar “Affiliates” program in New York after the state statute was enacted.
A copy of the ruling is available below.
In response to the ruling, New York State Commissioner of Taxation and Finance Thomas H. Mattox said in a statement that the ruling affirms the state's fair taxing policy, which targets both brick-and-mortar and Internet-based businesses. "We commend the Court for recognizing the logical application of existing precedent to the 21st Century economy," he said.
"Since being implemented, this law has resulted in the collection of roughly $500 million in State and local sales tax," Mattox said. "This is equivalent to approximately $6.0 billion of taxable retail sales into New York that were previously made without the sales tax being collected.”
David Lombardo contributed to this report.
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