Amazon.com Inc.’s (NASDAQ:AMZN) request that the U.S. Supreme Court weigh in New York’s state tax law regarding online retailers has been rejected, as the Supreme Court has decided not to tamper with a law requiring online retailers to collect sales tax from customers in the state even if the company has no physical operations there, according to a report from Bloomberg.
In September, Amazon decided to petition the Supreme Court to rule on a 2008 New York state tax law. Amazon believes that the requirement that online retailers pay sales tax even if the company doesn’t have physical operations in the state is unconstitutional. According to Bloomberg, that law and similar ones have been dubbed “the Amazon laws” because they only apply to large online retailers.
Amazon isn’t against the idea of paying sales tax at all — it already does in several states and has lobbied for the Marketplace Fairness Act, which will require all online retailers to collect sales tax in every state — just New York’s law in particular. New York’s policy on the matter was one of the first created in the face of the rise in online retail. 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.
Amazon believes New York’s policy is unfair. The company supports tax law that will require all online retailers above a certain size to pay sales tax whether or not the company has operations located in the state. The Supreme Court’s decision to keep its hands off the matter leaves it to Congress to decide on the Marketplace Fairness Act.
The rise of online retail has made collecting sales tax from e-commerce sites a multibillion dollar question. According to Bloomberg, states lose about $23 billion per year from unpaid tax on items purchased online. For its part, Amazon knows that its business is much too large for it to get out of paying sales tax completely. The company would just prefer to work under one uniform, national sales tax policy, as opposed to 50.
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