Multistate – US Supreme Court, New York State Dept of Taxation Brief in Opposition (October 2013)

SALT Report 3162 – In response to Amazon and Overstock petitions for writ of certiorari the New York Department of Taxation has filed its Brief in Opposition detailing the reasons why the Department believes the petitions should be denied.

Quotes from the brief:

“Although sales taxes are indisputably owed when a New York resident purchases goods from an out-of-state retailer for delivery in-state, the overwhelming majority of those purchases are never reported to the state taxing authorities, and hence taxes on them are never collected.”

“The petitions for certiorari should be denied for three reasons.”

“First, the principal grounds on which petitioners seek certiorari either mischaracterize the Statute or raise new arguments not litigated or preserved below.”

“Second, the decision below does not conflict with any decision of this Court or any state supreme court or federal court of appeals, and pending industry, judicial, and legislative consideration of taxation of online sales is likely to further develop the issues raised here-or moot them altogether.”

“Third, The Court of Appeals’ decision is clearly correct and breaks no new ground.”

“But the court declined to reach the constitutional issue, holding instead that the statute was preempted by the federal Internet Tax Freedom Act’s moratorium on discriminatory taxes on electronic commerce…As the dissenting justice observed, that moratorium is scheduled to expire in 2014 – a development that would revive and reinstate the Illinois statute by operation of law and permit the court to confront the Commerce Clause challenge a year from now.”

“Yet as petitioners’ amici acknowledge, the unprecedented…capabilities of the Internet and the exponential growth of computer processing power have eased compliance with state tax collection obligations.”

“And private services are available to calculate and collect the taxes that retailers must collect.”

“…Congress is currently considering a proposal that would authorize States to mandate the collection of sales and use taxes by out-of-state sellers with at least $1 million in annual sales so long as the State adopts certain tax simplification requirements.  See Marketplace Fairness Act of 2013, S. 743, 113th Cong. (2013).”

“Passage of federal law requiring retailers to collect state sales and use taxes would render unnecessary any decision by this Court on the validity of the Statute.”

For Further Information:

New York State Dept of Taxation Brief in Opposition October 2013