More than a year after Amazon began collecting sales tax on sales in states like Texas and California, it’s mounting a legal offensive against a requirement to do the same thing in New York, taking its argument to the US Supreme Court. And the Financial Times writes that the company has hired one of Washington’s biggest lawyers, Ted Olson, to lead the charge. The company filed a petition late last week asking the court to rule on the New York tax department’s requirement that Amazon collect tax from its customers in the state.

As an online-only retailer, Amazon benefits where it doesn't have to collect tax

Amazon had previously backtracked on an earlier stance opposing the collection of sales tax altogether, voicing support for the Marketplace Fairness Act of 2013, which gives states the authority to collect sales tax from online storefronts. As an online-only retailer, Amazon benefits where it doesn't have to collect tax since it lowers the sticker price of its products compared to those at brick-and-mortar competitors. While customers are still supposed to remit the tax, few are believed to go to the trouble, and competitors in traditional retail understandably want Amazon and other online retailers to be held to the same standard as physical storefronts.

The FT points out that online retailers were traditionally not required to collect sales tax in states where they don’t have a physical presence, but Amazon has been focusing on a more diffuse distribution network, with more local warehouses. It has also begun collecting sales tax in several states. Against that backdrop, the decision to go to court over tax collection in New York has many scratching their heads. "It is puzzling," said Jason Brewer of the Retail Industry Leaders Association.

A 2008 New York law requires Amazon to collect sales tax in the state

But what sets New York apart is the size of its market and the fact that Amazon doesn’t have a physical presence there. However, a 2008 New York law requires Amazon to collect sales tax in the state because of its connections to New York-based sites that serve Amazon ads. Amazon is trying to strike down the law, arguing that it "significantly and unduly" burdens cross-border shopping and "threatens to sow widespread confusion."