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Supreme Court Conference Scheduled for New York v. Amazon, Overstock

  • Nov 19, 2013 | Gail Cole

 The Supreme Court to weigh in on Amazon and Overstock v New York on November 26.

The State of New York is involved in a drawn-out legal battle with Amazon and Overstock. Both cases center on the New York 2008 affiliate nexus law requiring the two businesses to collect New York sales tax. Last spring, the New York Court of Appeals upheld the state’s position. In response, both Amazon and Overstock filed a writ of certiorari with the Supreme Court, asking the high court to hear the cases.

The much anticipated Supreme Court response was revealed last week… sort of. The court scheduled a November conference to address the Amazon and Overstock cases.

On November 26, the justices will convene in a private conference room and determine whether or not they will take the case. The process is explained on the Supreme Court website as followed:

“The Chief Justice opens the discussion, summarizing each case. The senior Associate Justice speaks next, and comments pass down the line. To be accepted for review, a case needs only four votes, fewer than the majority required for a decision on the case itself.”

The door to that private conference room will be closely watched on the 26th.

Physical presence challenged

Increasingly, states are pushing against the Supreme Court’s pivotal 1992 Quill Corp. v North Dakota decision by imposing affiliate nexus laws requiring out-of-state sellers with no physical presence in the state to collect and remit sales tax. Businesses have responded in two ways: by complying or by severing relationships with affiliate partners.

Amazon has done both. It has complied with the New York law (although it has been fighting it in court) and now collects sales tax in New York. Yet it has severed affiliates in Maine, Minnesota and Missouri. It is lobbying for the Marketplace Fairness Act of 2013, federal legislation that would allow states to require remote vendors to collect sales tax, even as it is challenging the constitutionality of New York’s affiliate nexus law.

When the United States Senate passed the Marketplace Fairness Act last May, it looked like a federal solution to the issue of remote sales tax was possible. Since then, the bill has been gathering dust in the House. “A U.S. Supreme Court ruling on the issues in these cases may be our best chance to somehow fix/improve/clarify/destroy the physical presence standard—which many argue is now unrealistic given our transition to the internet marketplace, while others argue is necessary and fair to protect out-of-state businesses from state tax burdens.”

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.