New York’s highest court ruled yesterday the state can collect sales tax from out-of-state retailers, rejecting claims by Amazon.com and Overstock.com that the tax law violates the US Constitution’s Commerce Clause.
The Court of Appeals said in a 4-1 ruling that the 2008 amendment meets the Supreme Court test that the sellers have “a substantial nexus” with the taxing state.
Taxes apply when the online retailers generate at least $10,000 in annual sales to New Yorkers from in-state websites that earn commissions by bringing in potential customers through links to the retailers.
Amazon.com, with corporate offices in Washington state, has an “Associates Program,” where others put such links on their websites. Overstock.com, based in Utah, suspended its similar “Affiliates” program in New York after the state statute was enacted. Because the program was suspended, Overstock said the ruling will have no impact on its operations.
New York’s sales tax is 4 percent, and all its counties and New York City add an additional tax ranging from 3 percent to near 5 percent. Both apply to applicable Internet sales, the state Department of Taxation and Finance said.