Sales Tax Slice: Amazon and Overstock on the U.S. Supreme Court’s Calendar…for Conference.

Less than one month after the New York State Department of Taxation and Finance filed its reply brief in opposition to Inc. and LLC's petitions for writ of certiorari in the U.S. Supreme Court, a conference has been scheduled in the Court for Nov. 26, 2013.

In these closely watched cases, Overstock and Amazon challenge the New York Court of Appeals decision upholding a statute that presumes certain internet companies have a physical presence in the state, and thus allows the state to require such out-of-state internet retailers to collect and remit sales and use  tax. Overstock and Amazon argue that the decision requires an out-of-state retailer to collect state tax, even if the retailer does not actually have physical presence in the state, which is in direct conflict with the U.S. Supreme Court's ruling  in Quill Corp. v. North Dakota, 504 U.S. 298 (1992). 

Several organizations, including the Council on State Taxation (COST) and the Tax Foundation and National Taxpayers Union, have filed amicus briefs encouraging the U.S. Supreme Court to grant writs of certiorari to Overstock and Amazon.

Since the 1992 Quill decision, technology has certainly changed, but the physical presence requirement remains.  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. 

Although the Court, of course, is under no obligation to grant writs of certiorari filed, does the latest action, taking place on Nov. 12, signal that the Court plans to give the case more than just a glance? With so many certiorari petitions filed each session, does the Court have time to schedule a conference for cases it doesn't plan on taking for further review and decision? Should we start setting up camp outside the Court to reserve a place in line for a seat at the arguments? Only time will tell as we keep a close watch for new developments - for now, mark your calendar for November 26.

By Ean Hamilton

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