Amazon.com has filed a lawsuit challenging New York State's new law forcing out of state online retailers to collect sales tax on shipments to state residents. New York residents making online purchases were previously obligated to pay the applicable tax to New York, the new law requires online vendors to collect New York sales tax on sales tax on behalf of the state. In its suit, Amazon.com challenges that under the United States Supreme Court Quill decision - which requires a physical presence in the state in order to require collection of sales tax -- the statute is invalid because it requires out-of-state vendors to collect New York tax even if there is no substantial nexus with company and the State. Amazon's complaint is attached.
The new law is based on a novel definition of what constitutes a presence in the state: It includes any Web site based in the state that earns a referral fee for sending customers to an online retailer. Amazon's suit challenges the constitutionality of this interpretation and seeks a declaratory judgment that it is invalid. It further also challenges that the statute vague and overly broad, and improperly targets it.
To read Jonathan Ezor's Newsday op-ed piece on the new law, click here.
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