WASHINGTON – On perhaps the busiest online shopping day of the year, the Supreme Court refused on Monday to wade into a dispute over New York state’s taxes on purchases on websites such as Amazon.com. The move likely will prompt more states to attempt to collect taxes on Internet sales – and ignite a furious battle in Congress involving Internet sellers, brick-and-mortar stores and states hungry for extra tax revenue.
The high court without comment turned away appeals from Amazon.com LLC and Overstock.com Inc., in their fights against a New York court decision forcing them to remit sales tax the same way in-state businesses do. This could affect online shopping in that state, since for many shoppers one of the attractions of Internet purchasing is the lack of a state sales tax, which makes some items a little cheaper than they would be inside a brick-and-mortar store.
The National Council of State Legislatures estimated that states lost an estimated $23.3 billion in 2012 as a result of being prohibited from collecting sales tax on online and catalog purchases.
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.