Supreme Court Let’s New York Amazon Ruling Stand
The U.S. Supreme Court has denied the petition of Amazon.com and Overstock.com to review the New York high court’s decision to uphold its Amazon-tax statute. The statute, the first of many in the nation, defined an in-state retailer for purposes of collecting sales tax to include a retailer who paid over $10,000 to in-state affiliates during the previous four quarters.
Amazon and Overstock argued that the decision went beyond the bright-line test established by the Supreme Court in Quill Corp. v. North Dakota, when it stated that under the Due Process and Commerce Clauses of the Constitution, a state can only require retailers with an in-state presence to collect taxes.
In denying the petition, the Supreme Court may be deferring to Congress’ authority to regulate interstate commerce particularly since it is currently considering legislation to address this issue. The Senate passed the “Marketplace Fairness Act”. The Act allows states to require out of state retailers to collect sales tax provided they are part of the Streamlined Sales and Use Tax Agreement which currently includes 24 states are members (see map left) or take steps independently to streamline and simplify the sales tax collection process. The bill, however, exempts entities having less than $1M a year in total remote sales in the U.S. the prior year.
The bill passed the Senate 69-27 in May, but has received a chilly reception in the House of Representatives where conservative Republican opposition to the bill is growing.
This is an issue that may resolve itself without court intervention and the court has historically been reluctant to intervene in an issue prematurely (except when it involves elections in Florida). Should Congress fail to act, there is no doubt it will receive petitions to review other state Amazon laws and it will have the opportunity to intervene then should it do so.