Amazon Wars May Have Supreme Finale

Amazon Files Cert Petition with Supreme Court

It began as a battle between Amazon and the State of New York over the state’s reinterpretation of what constituted an out-of-state retailer for sales tax purposes.  When New York courts dismissed Amazon’s initial challenge, other states rushed into consideration of similar measures and with Amazon and other retailers threatening punitive measures for any states that moved forward – thus began the Amazon Tax Wars.   Over time, Amazon lost ground at the states or reached compromises with those in which it had a physical presence and turned its attention to a Congressional solution.  While it succeeded in passing the Marketplace Fairness Act in the Senate, it seems likely to die in the House of Representatives.

So Amazon has decided to petition the Supreme Court to review the recent New York Appeals Court decision upholding the statute and has enlisted Ted Olsen, the former Solicitor General, who argued Bush v. Gore and the recent  California Prop. 8 cases before the Supreme Court.

As explained previously, the whole gymnastics over the Amazon tax stems from a Supreme Court case (Quill v North Dakota) which established a bright line test that a physical presence was required before an out of state retailer should be required to collect sales tax.  In upholding the New York law, the New York high court punted onQuill by stating:

The world has changed dramatically in the last two decades, and it may be that the physical presence test is outdated. An entity may now have a profound impact upon a foreign jurisdiction solely through its virtual projection via the Internet. That question, however, would be for the United States Supreme Court to consider.

In contrast, the lone dissenter cited Quill that “mere advertising by the out-of-state retailer in in-state media does not” constitute having a physical presence in the state.

A Supreme Court decision could provide the clarity that is being sought through the Marketplace Fairness Act.

Colorado Injunction Reversed

On a related note, the 10th Circuit Court of Appeals reversed the Direct Marketing Association’s injunction against implementation of the Colorado “Big Brother” version of the Amazon tax (see prior post) on jurisdictional grounds.  The court held that jurisdiction was barred by the Tax  Injunction Act, which provides that

district courts shall not enjoin, suspend or restrain the assessment, levy or collection of any tax under State law where a plain, speedy and efficient remedy may be had in the courts of such State.

28 U.S.C.  Section 1341.