The media, online retailers, and many states are positively a-buzz on today’s news about the dismissal by a New York state judge of the Amazon.com suit challenging that state’s law requiring certain non-New York Internet retailers to collect and remit New York sales tax.
The suit – Amazon.com, LLC v. New York State Department of Taxation and Finance, No. 08601247, filed April 25, 2008, challenged the New York law on constitutional grounds (Due Process and Equal Protection claims) and was dismissed on New York State Supreme Court Justice Eileen Bransten’s findings that the e-commerce giant failed to state a claim and that there would be “no basis upon which Amazon can prevail.” Ouch!
The legislation essentially presumes physical presence where some people may not have traditionally thought it to exist – demonstrating the potentially flexible Constitutionally defined contours of “nexus” through the looking glass of e-commerce, particularly in a time when state budgets are running threadbare.
The new law requires certain out-of-state companies to collect New York state and local sales taxes for sales made through New York-based affiliates. Consumers in New York previously were obligated to pay sales or use taxes when purchasing goods from outside-of-New York retailers, but the new law makes the out-of-state retailer responsible for collecting and remitting taxes to New York as a registered New York vendor. With all of the crowds, hassles, and weather issues to contend with in New York, it’s easy to see that many a New Yorker shops online – and why the state has an interest in ensuring that it captures sales tax revenues.
This so-called “Amazon Tax” – signed into law just last April – already caused online retail giant Overstock.com to cut off its relationships with its New York affiliates, and it remains to be seen what other e-commerce companies may choose to do.
For just some of the media coverage on this huge news item, read here, here, here, here, and here. 
Filed under: Court Cases, E-Commerce Tagged: | Amazon, Amazon Tax, Amazon.com, cases, E-Commerce, New York, online retailer, state budgets
Could a case like this go up to the US Supreme Court? Or, since it is a state matter, is Amazon’s only option to appeal? (These are the types of cases you never see on Law & Order.)
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