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December 3, 2013

US Supreme Court refuses to hear online retailers’ sales tax case

States lose approximately $23bn per year in uncollected sales taxes from web retailing firms.

By CBR Staff Writer

The US Supreme Court refused to hear a case over Internet sales taxes to be collected by online retailers including Amazon.com, in states where they do not have any physical presence.

The justices denied appeal made by Amazon and Overstock.com, which claimed the law, supported by New York’s top court, breaches the Constitution by insisting collecting tax from businesses that do not have facilities in the state.

Reports revealed that states lose approximately $23bn per year in uncollected sales taxes from web retailing firms.

Amazon, however, agreed to collect taxes in some of the states as it establishes distribution centres, while opposing efforts by others to require sales taxes independently.

In March 2013, the New York Court of Appeals ruled that Amazon and Overstock could be forced by the state to collect tax from online sales.

Both firms asked for a review by the high court, referring to the Commerce Clause of the Constitution, which bounds the power of states to control interstate commerce.

In addition, the online retailing company supports federal legislation for countrywide state sales tax enforcement, while other firms such as eBay and Overstock, fought against it.

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