NY top court OKs tax on online sellers like Amazon

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New York's highest court ruled Thursday the state can collect sales tax from out-of-state retailers, rejecting claims by Amazon.com and Overstock.com that the tax law violates the U.S. Constitution's Commerce Clause.

The Court of Appeals said in a 4-1 ruling that the 2008 amendment meets the U.S. Supreme Court test that the sellers have "a substantial nexus" with the taxing state. Taxes apply when the online retailers generate at least $10,000 in annual sales to New Yorkers from in-state websites that earn commissions by bringing in potential customers through links to the big retailers.

Amazon.com, with corporate offices in Washington state, has an "Associates Program" where others put such links on their websites. Overstock.com, based in Utah, suspended its similar "Affiliates" program in New York after the state statute was enacted.

New York's sales tax is 4 percent and all its counties and New York City add an additional tax ranging from 3 percent to near 5 percent. Both apply to applicable Internet sales, according to the state Department of Taxation and Finance.

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