ALBANY, N.Y. (AP) — New York's highest court ruled Thursday 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 U.S. Constitution's Commerce Clause.
The Court of Appeals said in a 4-1 ruling that the 2008 amendment meets the U.S. 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 big 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.
"Through this statute, the Legislature has attached significance to the physical presence of a resident website owner. The decision to do so recognizes that, even in the Internet world, many websites are geared toward predominantly local audiences," Chief Judge Jonathan Lippman wrote. "Viewed in this manner the statute plainly satisfies the substantial nexus requirement."
"The bottom line is that if a vendor is paying New York residents to actively solicit business in this state, there is no reason why that vendor should not shoulder the appropriate tax burden," Lippman wrote. Judges Victoria Graffeo, Susan Read and Eugene Pigott Jr. agreed.