Developments in Multistate Taxation -- November 2013

U.S. Supreme Court -

On August 23, 2013, an online retailer filed a petition for a writ of certiorari with the U.S. Supreme Court seeking review of the New York Court of Appeals’ determination that a New York statute that subjects online retailers without physical presence in the state to New York sales and compensating use taxes does not, on its face, violate the Due Process or Commerce Clauses of the U.S. Constitution. The New York Court of Appeals found that an online retailer may be presumed to have nexus in the state when a link to the retailer’s website is hosted on the website of a New York resident who is compensated on a commission basis.

U.S. Court of Appeals for the Tenth Circuit -

The U.S. Court of Appeals for the Tenth Circuit held that the Tax Injunction Act divested the U.S. District Court for the District of Colorado of jurisdiction over a marketing association’s Commerce Clause claims and that it, therefore, had no jurisdiction to reach the merits of the Colorado Department of Revenue’s appeal. The district court had granted a permanent injunction against the enforcement of Colorado’s statute imposing a use tax reporting requirement on out-of-state retailers who do not collect sales tax and had held that the statute violates the Commerce Clause of the U.S. Constitution because it: (i) directly regulates and discriminates against out-of-state retailers and interstate commerce; and (ii) imposes an undue burden on interstate commerce. The Tenth Circuit remanded the case to the district court to dismiss the marketing association’s Commerce Clause claims for lack of jurisdiction and to dissolve the

permanent injunction.

Originally published in Corporate Business Taxation Monthly on November 11, 2013.

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