New Mexico Hands Online Bookseller Sales Tax Bill And Wins
- Apr 20, 2012 | Susan McLain
The New Mexico State Court of Appeals has ruled that Barnes&noble.com, LLC owes back sales taxes for sales from 1998 to 2005. They were handed a bill in 2006 for $534,563 in gross receipts taxes. According to abcnews.com, “[t]he company protested and a state agency hearing officer agreed with the company that it wasn’t required to collect and pay the tax because it had no presence in the state or what is known as a ‘substantial nexus’ with New Mexico.” But other interpretations have taken the argument to a different conclusion.
The New Mexico State Department of Revenue “…contended that activities at the in-state stores, including gift cards that could be redeemed online and a membership plan that offered online discounts,” created the connection. However, this was not the argument that the Court of Appeals felt truly created nexus. “[I]t concluded the ‘in-state use of the Barnes & Noble’s trademarks was sufficient to meet the constitutional standard’ to permit the New Mexico tax.”
Due to the fact that “…the trademarks were licensed to the online retailer and the company with in=-state stores, Barnes & Noble ‘was in effect telling customers to consider taxpayers (the online retailer) and booksellers to be one and the same,'” according to the court.
Barnes and Noble is currently collecting the New Mexico sales tax on online purchases, but the state “…expects the case to end up before the state’s highest court.”