Feeds

New York judge OKs Amazon Tax

Genius recognized

The essential guide to IT transformation

A New York Supreme Court judge has approved the state's new-fangled Amazon Tax.

Earlier this year, Amazon.com and Overstock.com sued New York over an ingenious new law that forces the big-name online retailers to collect sales tax if they maintain affiliate networks in the Empire State, and this afternoon, Judge Eileen Bransten dismissed them both.

Bransten handed down her final dispositions in the two cases, which have been watched with a certain amount of trepidation by online retailers because of the precedent it could set for tax collection in states where they do not maintain offices.

Amazon and Overstock did not immediately respond to request for comment.

Back in April 2008, as part of its budget, New York enacted a new tax law called the Commission-Agent Provision, which requires out-of-state retailers to collect and remit sales and use taxes if they have a commission agreement with an in-state resident based on the referral of customers (provided that resident earns more than $10,000 in revenues from New Yorkers).

A 1992 US Supreme Court decision says that retailers needn't collect sales tax unless they have a physical presence in the state where the customer resides. Otherwise, customers are required to declare the tax on their tax returns. But few do. With its new law, New York hung that physical presence tag on affiliate marketers.

On April 25, Amazon sued New York's taxation department. Then, in May, Overstock suspended its relationships with any affiliates that had a New York address. And in June, the company sued the state, challenging the constitutionality of the tax law.

Both Amazon's and Overstock's lawyers contended that the law violates the Commerce Clause of the U.S. Constitution and the Due Process Clauses of the Fourteenth Amendment to the Constitution and sought a permanent injunction prohibiting New York from enforcing the law.

Amazon said it did not have a sufficient nexus (physical presence) in the state to be compelled to collect sales taxes and basically contended that it was being singled out with this tax law tweak. In the dance of the lawyers, New York moved to dismiss the Amazon and Overstock complaints, before Amazon and Overstock opposed the motions and moved for summary judgment from the court.

Judge Bransten basically shot down all of the company's claims that New York state was picking on Amazon because it needed the dough.

"In the end, the Commission-Agreement Provision does not broadly tax any and all Internet sales to New York consumers," she wrote in her ruling. "It requires a substantial nexus between an out-of-state seller and New York through a contract to pay commissions for referrals with a New York resident along with realization of more than $10,000 of revenue from New York sales earned through the arrangement. The neutral statute simply obligates out-of-state sellers to shoulder their fair share of the tax collection burden when using New Yorkers to earn profit from other New Yorkers."

The dismissal of the Overstock case was based on the ruling Judge Bransten made in the Amazon case. It is fairly certain that both Amazon and Overstock will appeal these rulings. If they decide to, they will take up their cause with the New York State Supreme Court Appellate Division, and then it would go up higher to the New York State Court of Appeals. Because it is a constitutional issue, it could in theory get to the U.S. Supreme Court.

Don't spend that tax money just yet, guv'ner. ®

5 things you didn’t know about cloud backup

More from The Register

next story
Hello, police, El Reg here. Are we a bunch of terrorists now?
Do Brits risk arrest for watching beheading video nasty? We asked the fuzz
Snowden on NSA's MonsterMind TERROR: It may trigger cyberwar
Plus: Syria's internet going down? That was a US cock-up
UK government accused of hiding TRUTH about Universal Credit fiasco
'Reset rating keeps secrets on one-dole-to-rule-them-all plan', say MPs
Caught red-handed: UK cops, PCSOs, specials behaving badly… on social media
No Mr Fuzz, don't ask a crime victim to be your pal on Facebook
e-Borders fiasco: Brits stung for £224m after US IT giant sues UK govt
Defeat to Raytheon branded 'catastrophic result'
Yes, but what are your plans if a DRAGON attacks?
Local UK gov outs most ridiculous FoI requests...
Felony charges? Harsh! Alleged Anon hackers plead guilty to misdemeanours
US judge questions harsh sentence sought by prosecutors
This'll end well: US govt says car-to-car jibber-jabber will SAVE lives
Department of Transportation starts cogs turning for another wireless comms standard
Munich considers dumping Linux for ... GULP ... Windows!
Give a penguinista a hug, the Outlook's not good for open source's poster child
UK fuzz want PINCODES on ALL mobile phones
Met Police calls for mandatory passwords on all new mobes
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
7 Elements of Radically Simple OS Migration
Avoid the typical headaches of OS migration during your next project by learning about 7 elements of radically simple OS migration.
BYOD's dark side: Data protection
An endpoint data protection solution that adds value to the user and the organization so it can protect itself from data loss as well as leverage corporate data.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?