An End to Tax-Free Online Shopping? SCOTUS Refuses to Hear Amazon's State Sales Tax Appeal.

Your News Companion by Ben Mathis-Lilley
Dec. 2 2013 11:32 AM

Supreme Court Won't Hear Amazon's State Sales Tax Appeal

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An employee packs products at Amazon's Fulfilment Centre in Peterborough, central England, on November 28, 2013

Photo by Andrew Yates/AFP/Getty Images

It's not as sexy as the somewhat dubious promise of drones one day dropping off your online orders on your doorstep, but today's news from the Supreme Court may have a more immediate impact on Amazon's bottom line. The Associated Press:

The Supreme Court on Monday refused to consider throwing out New York state's taxes on Internet purchases on websites like Amazon.com, a move that could change the way Internet commerce works. The high court refused without comment to hear appeals from Amazon.com LLC and Overstock.com Inc., in their fights against a state law that forces them to remit sales tax the same way in-state businesses do.
Web retailers generally have not had to charge sales taxes in states where they lack a store or some other physical presence. But New York and other states say that a retailer has a physical presence when it uses affiliates—people and businesses that refer customers to the retailer's website and collect a commission on sales. These affiliates range from one-person blogs promoting the latest gadgets to companies that run coupon and deal sites.
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The issue of whether online retailers can offer what largely amounts to tax-free shopping for many Americans is, in the words of the Jeff Bezos-owned Washington Post, "one of the most important in modern retailing." In addition to New York, around 20 or so other states have similar laws on the books and, with the high court's refusal to hear the the appeal, many of those states who aren't currenlty collecting taxes from online orders will no doubt move to do so in the near future. By at least one estimate, states lost more than $23 billion last year by not collecting sales tax on purchases made on websites and via more traditional mail-order catalogs.

***Follow @JoshVoorhees and the rest of the @slatest team on Twitter.***

Josh Voorhees is a Slate senior writer. He lives in Iowa City. 

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