New York state’s collection of online sales tax has withstood a legal challenge by Amazon and Overstock as the U.S. Supreme Court decided Monday morning not to hear an appeal of a March ruling by New York’s top court that found that the state could impose the tax.
With the Supreme Court’s rejection, the New York sales tax, and likely online sales tax in other states, is now firmly in place. The ABA, and a host of other bricks-and-mortar stores, has long argued that not collecting sales tax has given online retailers an unfair advantage in the marketplace. “It's heartening that the U.S. Supreme Court's decision has put to rest any legal question as to a state's ability to collect sales tax on Internet sales,” commented ABA CEO Oren Teicher. “And while we continue to strongly support a federal solution to sales tax fairness, today's action makes clear that individual states can enact legislation to level the playing field."
Amazon had argued that because it has no physical presence in New York, it shouldn’t be forced to collect sales tax when customers in the state buy an item from Amazon. New York argued that Amazon is subject to the law because it gets business through New York-based affiliates, paying them commissions for hosting online links to the retailer. The company, like ABA, supports passage of federal legislation that would make collection of online sales tax by retailers without a presence in a particular state uniform across the country. Amazon now collects tax in about 16 states and has closed down affiliates in some other states because it didn’t want to collect sales tax.