Supreme Court Refuses To Hear Amazon Online Sales Tax Lawsuit

    December 2, 2013
    Zach Walton
    Comments are off for this post.

Online sales tax – is it constitutional? That’s the question Amazon wanted an answer to when it petitioned the Supreme Court to hear its argument against New York state regarding the state’s right to collect sales tax from purchases made in the state despite the online retailer not having a physical presence in the state. Well, Amazon will have to wait a bit longer to get an answer.

Forbes reports that the Supreme Court has refused to hear Amazon’s lawsuit against New York state. For those just joining us, New York instituted a law in 2008 that said online retailers had to collect sales tax even if they were tangentially related to a physical presence in state. In this case, Amazon was forced to collect sales tax merely because it sold advertisements through a New York-based Web firm.

As you can imagine, Amazon saw the New York law as an overreach of the state’s ability to collect taxes. The online retailer sued the state, but the state Supreme Court ruled that the law was constitutional. By refusing to hear the case, the SCOTUS has effectively said that Amazon will now have to abide by the New York online sales tax law.

Is this a big deal? Not really, as Amazon has been one of the biggest proponents of the much maligned Marketplace Fairness Act. The legislation, which was passed by the Senate earlier this year, would require all online retailers to collect sales tax from every customer regardless of having a physical presence in a state.

So, why is Amazon throwing its weight behind a bill that would tax purchases made in every state while simultaneously fighting a bill that does the same thing in just one state? It’s all about priorities. The Marketplace Fairness Act wouldn’t affect Amazon that much as it continues to build out more fulfillment centers in more states thus giving it a physical presence in more states. If the Marketplace Fairness Act isn’t passed, the retailer obviously doesn’t want to be stuck collecting sales taxes in states that it doesn’t have a presence in. That way Amazon can then barter with those states to collect sales tax in exchange for the state helping to build more fulfillment centers.

In short, Amazon has a plan worked out for either scenario, but the New York law throws a monkey wrench into those plans. Even if the Marketplace Fairness Act isn’t passed, other states that Amazon doesn’t operate out of might follow New York and pass bills that target large online retailers before Amazon has a chance to negotiate with them.

In the end, we’re all probably going to end up paying sales tax for online purchases. The only question that remains is how those taxes will be collected. Will online sales tax legislation be introduced on a state-by-state basis, or will the federal government pass the Marketplace Fairness Act? My money’s on the former as House Speaker John Boehner doesn’t seem too interested in approving new any taxes anytime soon.

But hey, at least we’re getting drone delivery by air out of it.

[Image: Amazon]

  • Really

    Good article. But who are we kidding. America is all about taxing people. America taxes people several times over on the same money they earn and you even get taxed a death. This whole push to go to electronic money is to make it easier for the government to tax you. Say you want to give your grandkids $20,000 inheritance. It is much easier to give it to them in cash so they don’t get taxed. The government wants to eliminate stuff like that. They want that revenue.

    The sad part is the American people literally get nothing for their tax money. It goes to the FED which is a private bank. It goes to black budgets that can’t be tracked. It is robbery. The vast majority of tax money disappears. People think that criminals locked up in prison are the worst. No way, it is the people running the government. I am very serious when I say this. Don’t worry about the guy stealing 15,000 dollars worth of copper. Worry about those in politics stealing billions.

    Americans live in a delusion as to what is really going on in their own country. An utter delusion.

    • http://www.promodrone.com/ Lee Davis

      @Really – You’re RIGHT on the money (pun intended, lol!). As an American expat, your concise overview is why I chose to get out. Luckily, my papers were in the pipeline 2 wks before 9/11, so I didn’t have too long to wait for my escape. @Really – this is why the U.S. public school system is underfunded. Can’t have a bunch of tax/wage slaves demanding their freedom from the system now, can we (lol!)?

  • http://bamajr.com Bamajr

    Forcing websites to charge sales tax, will essentially kill the internet, as it exists now. No one is going to pay both sales tax and shipping, when they could go to their local stores, to get it – which is the point. Huge corporations are loosing money to the small businesses, via internet sales. So, they are through inc their weight around, trying to buy legislation, with their deep pockets, while, at the same time, killing the small/medium business. Besides having to compete with the large retailers, they will also have to spend more time/money, managing what tax goes where, on a purchase, skyrocketing their overhead on accounting personel or services. Do not be decieved, The Marketplace Fairness Act is the government and large corporations, snuffing out small business.