Overstock.com, Inc. v State Dep’t of Taxation & Fin.

Plaintiffs in this case were Amazon.com and Overstock.com. Both companies were formed in states other than New York, were located in states other than New York, and sold their merchandise solely through the Internet. At issue was N.Y. Tax Law 1101(b)(8)(vi) (the Internet tax), which was amended in 2008 to provide that vendors who paid New York residents to actively solicit business in the State would be required to pay New York taxes. Plaintiffs challenged the Internet tax, alleging that it was unconstitutional on its face as a violation the Commerce Clause and the Due Process Clause. Supreme Court dismissed the complaints for failure to state a cause of action. The Court of Appeals affirmed, holding (1) the Internet tax did not subject online retailers without a physical presence in the State to New York sales and compensating use taxes; and (2) the tax did not create an irrational, irrebuttable presumption of solicitation of business within the State. View "Overstock.com, Inc. v State Dep't of Taxation & Fin." on Justia Law