Weekly Round-Up: Amicus Briefs Support Online Retailers on Issue of New York Internet Sales Tax

Several organizations have filed amicus briefs encouraging the U.S. Supreme Court to grant writs of certiorari to Overstock.com Inc. and Amazon.com LLC in their challenge to the New York Court of Appeals decision upholding a statute requiring out-of-state Internet retailers to collect and remit sales tax, Bloomberg BNA Editor Erin McManus writes in this week's issue of the Weekly State Tax Report.

The briefs argue that the March 28 decision by the New York court is in direct conflict with Quill Corp. v. North Dakota, a 1992 Supreme Court ruling which held that the Commerce Clause prohibits a state from requiring out-of-state businesses without a physical presence in the state to collect state sales tax.

The Council On State Taxation (COST) argues in its brief that the problem with the New York statute "is that it treats the activities of unrelated third parties as attributable to remote sellers despite any showing of an agency relationship between them." [Additional information on the COST brief can be found here.]

COST also distinguished both Scripto Inc. v. Carson and Tyler Pipe Indus. v. Washington Dept. of Rev., two Supreme Court cases from 1960 and 1987, respectively, where the court found that the businesses had nexus to the taxing states, McManus writes.

Specifically, "[i]n both Scripto and Tyler Pipe, the independent contractors were the agents of the seller and conducting activities on behalf of the remote seller that were substantially more than a passive link on a web page directing Internet traffic to the remote seller's web site," COST said.

Joseph Henchman of the Tax Foundation told Bloomberg BNA Oct. 3 that "the increasing state by state fragmentation" of state taxation of Internet sales is the most important reason for the court to grant certiorari.

Further, McManus writes, the COST brief described the varied attempts to tax remote Internet sales as resulting in "a patchwork of jurisdictional nexus standards, producing the confusion and uncertainty this Court's 'bright line' test for 'substantial nexus' in Quill was intended to avoid."

For a closer look at the briefs filed by various organizations, check out the complete article by McManus, available in this week's issue of the Bloomberg BNA Weekly State Tax Report.

In other developments…

BBNA Webinar - October 21: Hearing Officer to Discuss Proposed Changes to MTC's Compact

Free BBNA Webinar - October 25: COST Analyzes 2013's Hottest Developments With a View to 2014

Colorado Amendment 66: A $1 Billion Tax Increase on Small Businesses and Individual Taxpayers , a new report by the Tax Foundation

Issue Brief: Federal Shutdown - Understanding the Impact & Challenges for States , a new brief by the National Association of State Budget Officers

Compiled by Priya D. Nair
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