Amazon, Overstock Ask Supreme Court to Take Up Issue of New York Sales Tax Law

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After challenging New York State’s sales tax fairness law three times — and losing three times — at the state level, and have taken the fight to the nation’s highest court.

The online giants recently filed papers with the U.S. Supreme Court, arguing that that they should not be required to collect and remit in the state since they do not have substantial nexus, as reported by the Wall Street Journal.

New York State’s law, passed in 2008, requires remote retailers with online affiliates in the state doing $10,000 or more in annual sales to collect and remit sales tax to the state. New York’s law has resulted in the collection of roughly $500 million in state and local sales tax that would have gone uncollected.

Despite its expressed support for a federal solution to sales tax inequity, Amazon has continued to fight state sales tax collection by either challenging the laws in court or simply dropping its online affiliates. “We are disappointed that Amazon is continuing its legal fight to avoid sales tax collection in New York,” said ABA CEO Oren Teicher. “Amazon’s opposition at the state level does nothing to advance sales tax equity and, indeed, could set back the efforts of independent booksellers and other Main Street retailers to secure a sales tax equity solution at the federal level.”

Teicher added that he believes states will continue to pass state sales tax laws similar to New York State’s affiliate nexus law. “Sales tax fairness is no longer a matter of if, it’s a matter of when, making this Supreme Court challenge all the more confounding,” he said.

In late March 2013, the New York State Court of Appeals ruled 4-1 in favor of the state’s sales tax fairness law, dismissing arguments made by Amazon and Overstock that the law was unconstitutional. Both companies argued that their online affiliates were not sales agents, but were in fact advertisers, despite the fact that their affiliates worked for commission.

In the New York appellate court decision, Chief Judge Jonathan Lippman wrote: “[T]hrough this statute, the legislature has attached significance to the physical presence of a resident website owner. The decision to do so recognizes that, even in the Internet world, many websites are geared toward predominantly local audiences — including, for instance, radio stations, religious institutions and schools — such that the physical presence of the website owner becomes relevant to Commerce Clause analysis…. Essentially, through these types of affiliation agreements, a vendor is deemed to have established an in-state sales force.”

“Petitioners have no physical presence in New York — they do not own property there, do not maintain any New York offices, and do not employ New York personnel,” Amazon argued in the filing, the Wall Street Journal reported. However, the paper noted that Amazon does list New York City as one of its office locations, and a subsidiary,, is headquartered in New York.

Mark Griffin, general counsel for Overstock told the Journal: “The New York case makes bad law…. That was an end-run around 20 years of Supreme Court precedent.”