Amazon.com Inc. has petitioned the U.S. Supreme Court to overturn a demand that it collect sales tax on its goods sold in New York State. The online retailer is asking the court to consider the constitutionality of states collecting taxes from companies that do not have such physical operations as warehouses in those states.
Amazon has long relied on a 1992 Supreme Court ruling that gave retailers a pass on collecting sales tax in states where they do not have a physical presence. Conversely, retailers with physical locations have lobbied for years to get online retailers to collect taxes on sales, arguing that the 1992 ruling gave online competitors an unfair advantage. In March, the New York Court of Appeals upheld the state law requiring the collection of sales tax by Amazon and other online retailers.
In its filing, the company argued that upholding the New York state law would “significantly and unduly burden interstate commerce,” and that it would provide “a road map for other jurisdictions to inflict similar burdens on interstate commerce,” reports the Financial Times. In March, the New York Court of Appeals upheld the state law requiring the collection of sales tax by Amazon and other online retailers.
New York was among the first states to try to force Amazon and other online retailers to collect taxes. The state argued that a referral program the company runs, called Amazon Associates, gives the company a presence in New York. That program offers commissions to website operators for sales of Amazon products they generate through links on their pages.
With some states that have made similar claims, Amazon has negotiated deals to collect taxes, often in exchange for tax incentives to build operations in those states. Amazon has terminated its associates programs in other states in order to avoid tax collection.
In addition to litigating this case and negotiating with some states, Amazon is backing the Marketplace Fairness Act, a bill that would require online retailers with sales of more than $1 million to collect taxes for states in which they sold to customers.
For more on the Marketplace Fairness Act, click here.