In a setback for Amazon, the United States Supreme Court has passed on considering a challenge by the retailer to a New York state law seeking millions in sales tax from state residents who made online purchases.
Amazon and Overstock.com asked the Supreme Court to look into a 2008 New York state law that asserted state governments have the authority to collect taxes for purchases made from out-of-state online retailers. The decision, which comes on Cyber Monday, may be the death blow for tax-free online shopping.
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Congress is also considering legislation aimed at making it easier for state governments to collect such sales taxes. (The bill would exempt online merchants with less than $500,000 in annual sales.) The legislation, known as the Marketplace Fairness Act, sailed through the Senate in May but separate, similar legislation is still pending in the House.
For Amazon, which had argued that it was unconstitutional for a state to seek sales tax from an out-of-state entity, the move is a defeat. The company had agreed to charge sales tax in some states where it had set up distribution centers, but rejected the idea of a unilateral sales tax in all 50 states. Brick-and-mortar retailers, however, charge that online stores like Amazon are taking advantage of a loophole that needs closing.
Investors seem to have shrugged off the news, sending Amazon's stock down less than 1% in morning trading.
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