Amazon.com Inc. (NASDAQ:AMZN) is going to the Supreme Court over 2008 New York law requiring online retailers to collect sales tax.
At first, the issue seems pretty simple. Amazon doesn’t want to have to collect sales tax, which is why it’s challenging the New York law, right? Not completely. A report from Bloomberg Businessweek broke the issue down. Amazon has actually already agreed to pay sales tax in several states, and CEO Jeff Bezos has come out in support of the Marketplace Fairness Act, which is currently before Congress and would require online retailers to collect sales tax in all states.
So if Amazon supports paying sales tax, why is it going to the Supreme Court to challenge the New York law? Basically, Amazon has a problem with the way the law — which was one of the first requiring online retailers to collect sales tax — goes about making e-commerce businesses pay the taxes, not the end goal of collecting taxes from those businesses.
The law requires retailers with affiliates in the state to pay sales tax, not retailers with physical operations in the state, which means that e-commerce sites can easily get around the law by authorizing their affiliates, Businessweek explained.