Top U.S. Court Affirms State Sales Tax On Amazon

Washington (AFP) – The U.S. Supreme Court upheld Monday New York state’s law requiring Amazon to collect sales tax on items sold online, the latest decision in a long battle over ecommerce taxes.

The top U.S. court dismissed without comment an appeal from Amazon and online retailer Overstock.com, after the New York state Court of Appeals ruled the tax constitutional in March.

The decision requires Amazon to collect and remit sales taxes for goods sold to residents of New York state, an important battleground over the question of taxes for online sales.

State governments and brick-and-mortar retailers have long argued that online retailers should be required to collect sales taxes, to avoid giving an unfair advantage to ecommerce sites.

Amazon and others have argued that the U.S. constitution bars taxes on interstate commerce, and prior court decisions have held that etailers must collect sales taxes only in states where they have a physical presence.

The New York state case appears to narrow the tax exemption by defining the referring website partners of Amazon and Overstock as “an in-state sales force.”

Because Amazon and Overstock pay commissions on these sales from in-state website operators, New York is entitled to collect taxes, the state court ruled in March, in a case which dates back to 2008.

“The world has changed dramatically in the last two decades, and it may be that the physical presence test is outdated,” the state court opinion said.

It added that “active, in-state solicitation” establishes a presence in the state which requires the collection of sales taxes.

Amazon currently collects sales taxes in several states, and policies of other retailers vary from state to state.

Amazon has made deals in some states to delay the collection of sales taxes in exchange for establishing distribution centers which create jobs in those states.

There was no immediate comment from Amazon or Overstock.