December 3, 2013

Supreme Court unimpressed with Amazon’s sales tax moaning

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Amazon will not be allowed to pitch a fit here this year.

Amazon will not be allowed to pitch a fit here this year.

Yesterday the U.S. Supreme Court dealt with Amazon the way many of us in publishing wish we could: they simply ignored it.

That court rejected without comment an appeal by Amazon and Overstock of a ruling by New York State Court of Appeals this past March, itself an appeal of a 2008 ruling. Amazon was hoping to be allowed to skip out on having to collect sales tax in New York—as they already do in sixteen other states—and to avoid having to pay the hundreds of millions they should have been paying after they lost the original case ($360 million between 2008 and February 2012 alone). As Greg Stohr of Bloomberg Businessweek quotes, Amazon has been arguing that the New York law “subjects Internet retailers to significant burdens on pain of serious civil and criminal penalties.”

As we discussed back in February, the New York ruling is predicated broadly on the much-abused commerce clause of the constitution, but more specifically on a 1992 Supreme Court decision involving a mail order company,  Quill Corp v. North Dakota. In that decision the court ruled that a business must have a “nexus” in a state to be subject to sales tax there. This is the logic that has led Amazon and Overstock to end their affiliate programs in some states where sales tax is disputed, and in the case versus the state of New York to claim that affiliate members are actually advertisers for those businesses.

Amazon has joined other massive online retailers, including Wal-Mart, in their public support of legislation enacting a standard nationwide protocol on corporations that earn more than $100 million. That bill was passed by the Senate this May but, Stohr writes,

The House Judiciary Committee, led by Republican Representative Bob Goodlatte of Virginia, hasn’t held a hearing or released a schedule for considering the measure.

Goodlatte said he wants changes to the Senate bill and he released a set of principles in September. At the time, he said he wanted the legislation to be so simple that it wouldn’t require a small-business exemption.

Amazon has said they support the bill because, as they claim, dealing with different state sales tax laws is too complicated. This, from a company that stocks and sells over a hundred million products.

Until that law is potentially taken up, New York joins the ranks of other states requiring Amazon to pay sales tax on the state’s own terms. I hope in some terrible door-desked office in Seattle, someone is having a hissy fit about being forced to maybe think about kicking in for the schools, roads and other citizen-funded infrastructures they use in order to reap massive revenues. I hope there is loud griping, nasal whining, and hours of pathetic self-justification. And I hope the judges here in New York State and down in DC appreciate that they don’t have to hear it, at least not for another while.

 

Dustin Kurtz is former marketing manager of Melville House.

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