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The e-retailers were appealing a New York State Supreme Court ruling from March that upheld a 2008 New York law. That law makes it easier to require online retailers to collect taxes on orders placed by consumers in New York because it interprets more loosely the definition of what it means for e-retailers to have a physical presence... The New York law, however, says that if a retailer works with affiliate marketers—such as coupon sites and bloggers based in New York that post ads or refer traffic to an e-retailer’s site in exchange for a cut of any sale that results—the retailer has a physical presence in New York and must collect sales tax from New York consumers.
“We’re not surprised, but we are disappointed,” says Jonathan Johnson, executive vice chairman of Overstock. “I really think the Supreme Court non-decision today is an invitation for Congress to find a workable solution to the tax issue. The Marketplace Fairness Act isn’t it.”
This decision by the Supreme Court may lead companies and lobbying groups to turn up the pressure on Congress, where legislation is being considered that would clarify all states have the power to collect sales tax from online purchases. The legislation, entitled the Marketplace Fairness Act, passed the Senate in May but has since stalled in the House of Representatives.