In a blow to state tax collection efforts, a New York Appellate Court has ruled the Amazon lawsuit challenging state sales tax collection efforts can proceed. 

By now you know that the states and larger online retailers have been battling over whether sales tax can be collected by states, counties, cities and so on for online purchases made by their citizens. The effort to pass these laws are generally known as the “Amazon laws” since Amazon is the company that is almost always named in them. 

New York is perhaps the most tax happy state in the Union. Given this, it is hardly surprising that it was one of the first states to pass a law saying online retailers had to collect and pay taxes on all purchases made by citizens of the state, in this case New Yorkers. Amazon filed a lawsuit challenging the law and, as New York trial courts are apt to do, the lawsuit was dismissed. 

Amazon then appealed the case to judges who are, ahem, a bit more justice oriented and have actually heard of something called the Constitution. The appellate judges took their sweet time, but have now ruled. In a 5-0 decision, they have handed down a decision saying that Amazon has every right to pursue its lawsuit on constitutional grounds. It is a huge blow for the New York taxing agencies. 

So, what happens now? The case will be returned to the trial court where further deliberations will be held. It will then bounce back up to the appellate level at some point. Eventually, one of these cases in New York, North Carolina, Colorado or some other state will make it to the United States Supreme Court. Only then will we get a ruling that nails down the issue. Until then, it is all just a bunch of bee’s buzzing!