Legal News of the Day: Supreme Court Refuses to Hear Cases Challenging Internet-Only Sales Tax

Amazon_logoOn Monday, the Court refused to hear two new cases that challenged state taxes on Internet-only sales in states where those companies do not have a physical presence: Overstock.com Inc., v. New York Taxation Dep’t and Amazon.com v. New York Taxation Dep’t.  In both cases, the Internet retailers argued that they had no presence in the state and should be exempt from taxes on purchases made on those Internet retail sites by New York customers.  The Court of Appeals (the highest court in the state) ruled that they were subject to tax in New York because contracts with third-party local affiliates that generate customers for them through Internet links to the retailers’ websites is a substantial enough nexus to force the companies to collect taxes.  The Washington post posited that the court’s decision to stay out of the issue may pressure Congress to come up with a solution on a national level; in the meantime, Overstock.com has suspended its relationships with the local affiliates to avoid having to conform to the New York law.