Page 3 - Litigation

NYLJ.COM |
Litigation | MONDAY, FEBRUARY 24, 2014 | S3

BY ARIANNA FRANKL,
LEO LEYVA
AND RAIMUNDO GUERRA

With the advent of companies like
Amazon and Overstock, the past 20
years have seen a surge in commerce

through the Internet. Gone are the days where
consumers necessarily make purchases at
traditional “brick and mortar” shops. Instead,
consumers increasingly lock to websites,
which provide both the convenience of shop-
ping from home and, until relatively recently,
no sales tax.
Eager to access revenue streams from
online transactions, New York became one
of the irst states to successfully create a
statutory framework imposing a sales tax
on out-of-state retailers. Several other states
have followed suit, and Internet giants have
been vigorously litigating the passage of such

statutes on a state-by-state basis. Many had
hoped the constitutionality of these tax laws
would be resolved by the U.S. Supreme Court.
However, on Dec. 2, 2013, the high court
denied certiorari on just such a challenge to
New York’s statute by Amazon and Overstock,
increasing calls for congressional interven-
tion.1 This article examines state power to
tax Internet sales, litigation over New York’s
statute, and the state of congressional activ-
ity in this area.

State Power to Tax Internet Sales

Since the economic recession of the mid
2000s, states have increasingly looked for new
revenue streams,2 and taxing e-commerce
transactions has become a desirable target.
According to the U.S. Census Bureau’s most
recent e-commerce publication, U.S. retailers
reported online sales of $194 billion in 2011,
up 16.4 percent from $167 billion in 2010.3 In
fact, Internet sales were 4.7 percent of total
Analyzing the Power retail sales in 2011, up from 4.3 percent in
2010.4
A special hurdle posed by e-commerce is
the fact that online retailers often do not have
To Tax Internet Sales
the physical presence tradition- »
Page S14

ARIANNA FRANKL and LEO LEYVA are members, and OCK
RAIMUNDO GUERRA is an associate, of Cole, Schotz, GST
Meisel, Forman & Leonard in New York. Mr. Leyva BI
also practices in the New Jersey oice.

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