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Amazon's petition against collecting New York sales tax rejected by US Supreme Court

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Amazon box (STOCK)
Amazon box (STOCK)

The Supreme Court has declined to hear a case from Amazon that challenges a New York law requiring it to collect sales tax within the state, reports Bloomberg News. The law was passed in 2008 and requires that any out-of-state retailer collect taxes if it uses an in-state company to attract business. Amazon and Overstock challenged the law, but New York's highest court — the New York State Court of Appeals — upheld it. Though the law is meant to create a level playing field between in-state retailers and internet retailers like Amazon, which can advertise lower prices by not collecting sales tax, Amazon reportedly argued that the law "subjects internet retailers to significant burdens" in doing so.

Amazon can't avoid sales tax if it wants to build more distribution centers

Despite Amazon's protest against the law, the retailer has been increasingly willing to embrace sales tax lately as it opens distribution centers in more states. Traditionally, Amazon has only had to collect sales tax in states where it has a business presence — usually through one of its fairly limited number of distribution centers — but as states press harder for tax collection, it's shown a willingness to open in more locations.

After last night's announcement that Amazon plans to begin delivering packages within 30 minutes by small drones, adding distribution centers appears to be more necessary than ever. While there are likely bigger hurdles in Amazon's path than dealing with tax collection — namely, the FAA — the announcement suggests that Amazon will eventually have to give up on more of its state exemptions from collecting sales tax. That's something that many states and lawmakers would be excited to see: according to Bloomberg News, states are losing an estimated $23 billion each year in uncollected taxes because of internet retailers. Amazon has reportedly begun to change that by collecting taxes in 16 states — New York included.