Amazon's Fight against Online Sales Tax to Continue

Paul Lilly

A New York appeals court today backpedaled an earlier decision and has reinstated's (and Overstock's) lawsuit claiming that a law forcing them to collect sales tax in New York is "invalid, illegal, and unconstitutional," CNet reports .

Here's the deal. Neither of the above mentioned e-tailers have any kind of physical presence in New York, be it their headquarters or a shipping warehouse. As such, Amazon and Overstock argue that a 1992 Supreme Court ruling that says retailers can't be forced to collect sales tax on out-of-state shipments if they don't have offices in those states applies. New York decided to collect sales tax anyway and the original suit against the state was dismissed.

But now a New York appeals court unanimously agrees that "the dismissal of the entire complaint was premature" and wants to see the lawsuit continue. Victory for Amazon and Overstock?

Not so fast. The judges also ruled that, at least in some cases, the state law can be constitutional, so Amazon and Overstock have their work cut for them. What makes this whole situation so important is that whichever side prevails in the end could ultimately shape how business online is conducted, not just in New York, but all over the country.

Image Credit: Craig Toocheck via

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