Supreme Court Refuses to Hear Amazon Nexus Case

On December 2, the U.S. Supreme Court declined an appeal from both Overstock.com and Amazon.com that challenged the New York State Dept. of Taxation’s Internet sales tax law, otherwise known as the “Amazon” sales and use tax click-through nexus law. On ‘Cyber Monday’, the Supreme Court’s refusal to hear their appeal upheld a ruling from New York’s highest court requiring Internet retailers to collect sales taxes even if they have no physical presence in the state. The internet merchants failed in their attempt to challenge the constitutional validity of the New York state law, citing the Commerce Clause of the Constitution that limits the power of states to regulate interstate commerce. Under the Commerce Clause, an activity must have “substantial nexus” in a state before sales tax can be imposed. New York State law requires online retailers like Amazon and Overstock to collect sales taxes on purchases made by New York residents. The law additionally requires online retailers to collect and remit a state sales tax if they work with third party outlets that are located in the state of New York, or make sales through state residents that are paid for referrals, whether by the internet or any other way.