Amazon, Overstock plead in court against NY State sales tax

Amazon and Overstock have clashed with New York in a legal battle on the issue of sales tax.

In a case heard by the New York State Appeals, lawyers for two retailers said yesterday that 2008 New York law requiring them to collect sales tax on online purchases is unconstitutional, as reported by Reuters .

A 1992 decision the Supreme Court ruled that retailers can not be forced to collect sales tax on out-of-state purchases unless you have a physical presence in those states. But the law of New York around this decision. The State concluded that the entities based in New York that "directly or indirectly refer customers" on the website of a retailer represent a commercial presence in the state, which requires that taxes are collected.

Shortly after New York passed the law in April 2008, Amazon and Overstock filled lawsuits against the State of New York Department of Taxation and Finance. And now all three sides defend their positions in the highest court in New York.

Attorneys for Amazon and Overstock argued yesterday that Web references do not correspond to commercial presence and the place is more like buying an ad in a newspaper, Reuters noted. The state attorney countered that Web references differ from those advertising they lead people to make purchases directly.

In the past, lower courts have favored the position of the state. But the five appeal judges of the courts were less open to the arguments of counsel for both retailers, Reuters added.Much debate was centered on Amazon subsidiaries, which are the website owners or bloggers who link to Amazon on their sites to help drive traffic to the retailer.

If a sale is made, the scores affiliate commission.

Amazon had called it quits with subsidiaries in some states to avoid paying sales tax. But lately, the retailer has reduced prices with more states covering state taxes.
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