Supreme Court Declines to Review New York Click-Through Nexus Law
Dec. 5, 2013
On Dec. 2, the U.S. Supreme Court declined to hear Amazon.com and Overstock.com’s appeal of the New York Court of Appeals decision that upheld the state’s “click-through” nexus rule requiring many out-of-state retailers to collect sales tax on sales to New York customers. (Read prior coverage on the case.)
Most states’ click-through nexus provisions require out-of-state retailers to collect sales tax in the following situation:
- An in-state business maintains a link to an out-of-state retailer on its website
- The residents of that state access the website of the out-of-state retailer through a link maintained by the in-state business
- The out-of-state retailer pays a commission to the in-state business when a customer purchases goods after accessing the out-of-state retailer’s site through the link on the in-state business’s website
As a result of the Supreme Court’s decision not to hear the case, out-of-state retailers with click-through nexus that are not currently collecting sales tax from their New York customers should immediately begin collecting New York sales tax.
The issue is not as clear in other states where there have been no state court challenges to click-through nexus provisions. The Illinois Supreme Court has overturned its state’s click-through nexus provisions, but other state courts might not reach similar conclusions.
Unless this issue is resolved through passage of the Marketplace Fairness Act or other federal legislation, the Supreme Court’s inaction leaves out-of-state retailers with continued uncertainty regarding their sales tax obligations in states other than New York.
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