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Multistate Tax Update — April 11, 2013

In what may be viewed as a departure from long-standing U.S. Supreme Court precedent by many jurists, New York’s highest court ruled in favor of a controversial remote seller law last month. The underlying law in dispute was used to impose the obligation to collect sales tax on remote sellers who only conducted business through the Internet in New York and had no employees within the state.

The relevant portion of the law reads:

…a person making sales of tangible personal property or services taxable under this article (“seller”) shall be presumed to be soliciting business through an independent contractor or other representative if the seller enters into an agreement with a resident of this state under which the resident, for a commission or other consideration, directly or indirectly refers potential customers, whether by a link on an internet website or otherwise, to the seller[.]