Over the past year or so, click through or affiliate nexus has dominated the sales and use tax professional community. Contrary to popular belief this is not a new a “new” tax. Rather, the issue really boils down to whether certain online companies can be forced to collect sales and use tax in states in which they have no physical presence. In March 2013, New York’s highest court ruled that a state can make a llaw that required an online retailer to collect tax in a state in which it does not have any traditional physical presence. This click through nexus applies if a company pays commission for the in-state company’s web site for generating sales for the online retailer. There were actually two such cases, against Amazon and Overstock. Both companies believe that this ruling runs contrary to the Dormant Commerce Clause of the United States Constitution and prior United States Supreme Court rulings. Therefore, on August 23, 2013, both Amazon and Overstock filed a petition to ask the United States Supreme Court to hear the case.
While technology has changed the way we live and do business, the Supreme Court has not heard a case since 1992. This has lead to difficult planning for businesses and state and local tax professionals since the invention of the internet. We get calls almost daily dealing with nexus related issues and what a company should be doing in this era of uncertainty.
Many believe SCOTUS will take the case. After all a case like this has not been heard in some 20 years. On the flip side others believe that SCOTUS has bigger fish to fry than mundane state and local tax matters. Perhaps it is still waiting on Congress to act following the lashing it delivered in 1992. It is also worth pointing out that our partner, James Sutton, has been asked to file an amicus brief asking SCOTUS to take the case. Needless to say we will be following this one closely. For a more detailed analysis please visit our firm’s wesbite.
About the author: Mr. Donnini is a multi-state sales and use tax attorney and an associate in the law firm Moffa, Gainor, & Sutton, PA , based in Fort Lauderdale, Florida. Mr. Donnini’s primary practice is multi-state sales and use tax as well as state corporate income tax controversy. Mr. Donnini also practices in the areas of federal tax controversy, federal estate planning, Florida probate, and all other state taxes including communication service tax, cigarette & tobacco tax, motor fuel tax, and Native American taxation. Mr. Donnini is currently pursuing his LL.M. in Taxation at NYU. If you have any questions please do not hesitate to contact him via email JerryDonnini@Floridasalestax.com or phone at 954-642-9390. Please also visit his blog , Facebook, and Twitter.