One of the most lucrative reasons for buying goods online has historically been the lack of state sales tax. Not everybody lives in sales tax-less Delaware, and if consumers can avoid paying extra on goods, they will.

Amazon.com realizes this edge is a major part of their business model, and the company is prepared to go to the Supreme Court to make sure that no sales tax stays in place for New York customers.

Amazon filed to appeal the issue to the Supreme Court last Friday, arguing that their New York customers should not be subject to state sales tax since the company is based in Seattle. Amazon claims the company's operations in New York aren't substantial enough to trigger sales tax levies.

In the filing, Amazon argued, “Petitioners have no physical presence in New York—they do not own property there, do not maintain any New York offices, and do not employ New York personnel.” The company also claimed that an earlier New York State Court of Appeals ruling that upheld the tax was in error because advertising through New York-based third parties should not constitute a physical presence.

Complicating matters is that Amazon has slowly been making deals with state governments to collect sales tax in certain areas outside of its native Washington state. Amazon will begin collecting tax from Georgia and Virginia customers in September, and within the past year, they have begun collecting sales tax from New Jersey, California, Texas and Pennsylvania customers as well.

According to The Wall Street Journal, Amazon may not ultimately have a choice whether to collect state sales tax or not if Congress has its way. The Marketplace Fairness Act, currently a bill making its way through Congress, would give every state the option to collect sales tax for goods sold online. The WSJ says Amazon has come out in support of the bill in the past.

 

For how Supreme Court rulings are affecting in-house lawyers, check out these InsideCounsel stories:

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One of the most lucrative reasons for buying goods online has historically been the lack of state sales tax. Not everybody lives in sales tax-less Delaware, and if consumers can avoid paying extra on goods, they will.

Amazon.com realizes this edge is a major part of their business model, and the company is prepared to go to the Supreme Court to make sure that no sales tax stays in place for New York customers.

Amazon filed to appeal the issue to the Supreme Court last Friday, arguing that their New York customers should not be subject to state sales tax since the company is based in Seattle. Amazon claims the company's operations in New York aren't substantial enough to trigger sales tax levies.

In the filing, Amazon argued, “Petitioners have no physical presence in New York—they do not own property there, do not maintain any New York offices, and do not employ New York personnel.” The company also claimed that an earlier New York State Court of Appeals ruling that upheld the tax was in error because advertising through New York-based third parties should not constitute a physical presence.

Complicating matters is that Amazon has slowly been making deals with state governments to collect sales tax in certain areas outside of its native Washington state. Amazon will begin collecting tax from Georgia and Virginia customers in September, and within the past year, they have begun collecting sales tax from New Jersey, California, Texas and Pennsylvania customers as well.

According to The Wall Street Journal, Amazon may not ultimately have a choice whether to collect state sales tax or not if Congress has its way. The Marketplace Fairness Act, currently a bill making its way through Congress, would give every state the option to collect sales tax for goods sold online. The WSJ says Amazon has come out in support of the bill in the past.

 

For how Supreme Court rulings are affecting in-house lawyers, check out these InsideCounsel stories:

Wal-Mart extends insurance benefits to domestic partners

Labor: An ERISA Plan for Litigation (Part III)

Litigation: Data breach class actions stymied by recent Supreme Court decisions

IP: Inequitable conduct post-Therasense

Labor: Supreme Court clarifies definition of supervisor for Title VII discrimination and harassment cases