Tax Foundation Argues Against NY "Amazon Tax" Ruling

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According to a News Release by the Tax Foundation, the Foundation has filed a friend-of-the-court brief with the New York State Supreme Court's Appellate Division arguing that the state cannot legally compel, an out-of-state retailer, to collect sales taxes on purchases because the retailer does not have a physical presence in the state.

In the brief, Tax Foundation Tax Counsel Joseph Henchman reviews "substantial nexus" standards and states, "economic and technological developments of the past few decades make preserving a bright-line physical presence nexus rule for state taxation all the more vital."

The Fiscal Fact summarizes main points expressed in the brief as:

  1. States Can Only Tax Businesses That Have "Substantial Nexus" With the State
  2. The "Amazon Tax" Goes Beyond Any Previous Extension of Physical Presence
  3. New York's law is an unprecedented expansion of state taxing authority.
  4. Unconstitutionally Expansive Nexus Standards Like the "Amazon Tax" Undermine Legal Certainty, Interstate Commerce, and Economic Growth


The amicus curiae brief ("friend of the court") was filed by the Tax Foundation on September 9, 2009 in the New York Supreme Court, Appellate Division, First Department.

The case of, LLC v. New York State Department of Taxation and Finance, No. 601247-2008, is on appeal from the trial-level Supreme Court of New York.

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