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U.S. Supreme Court Denies Request to Review New York Remote Seller Sales Tax Nexus Law



The U.S. Supreme Court recently denied certiorari in New York’s Amazon and Overstock cases.1 Therefore, the decisions of the New York courts, finding that the New York sales tax “click-through” nexus standards for Internet sellers were Constitutional, were not disturbed. In this Tax Alert we summarize the New York click-through nexus statute, provide an overview of other developments regarding click-through and attributional nexus, and discuss briefly the current status of the Marketplace Fairness Act.

New York’s click-through nexus statute

New York’s sales tax statutes apply an attributional nexus concept by establishing a rebuttable presumption that a seller is soliciting business in New York (and is thus required to register and collect sales tax on all of its New York sales) if both of the following apply: (1) the seller enters into an agreement with a New York resident whereby the resident, for commission or other consideration, refers potential customers to the seller via Internet weblinks or other means; and (2) such referrals result in cumulative sales in excess of $10,000 over the preceding four-quarter period. U.S. Supreme Court precedent under the Dormant Commerce Clause holds that states may not impose sales or use tax collection obligations on sellers that lack physical presence in the state.2 The plaintiffs in the Amazon and Overstock cases believed that the New York law’s requirement that remote sellers collect sales tax violates the Commerce Clause, arguing that contracting with in-state “affiliates” does not equate to physical presence under the Court’s precedent.

Other click-through nexus developments; status of the Marketplace Fairness Act

In contrast to the New York statute that has been upheld, the Illinois click-through nexus law was struck down by the Illinois Supreme Court earlier this year.3 With no uniform federal legislation yet enacted in this area, each state is able to determine its physical presence nexus rules that compel out-of-state sellers to have sales and use tax filing and collection responsibilities. Several states have statutes similar to New York’s click-through nexus law. Now that it has been upheld, it is conceivable that more states may look to utilize the New York statute as a model in developing their own statutes. The Multistate Tax Commission is developing an Associate Nexus Model Statute that may follow the New York statutory approach. Additionally, there are several states that are considering legislation that would assert nexus based on other criteria, such as shared branding or common legal entity control, to further broaden the potential reach of sales and use tax collection requirements.

The discussion related to sales and use tax nexus will continue as states seek to extend their taxing authority to constitutional limits, unless there is federal legislation enacted to the 
contrary — such as the proposed Marketplace Fairness Act. The Marketplace Fairness Act passed the Senate on May 6, 2013, and is before the House of Representatives awaiting action in the House Judiciary Committee. If enacted, physical presence in a state would no longer be a prerequisite for states to require remote sellers to collect tax.


With increasing legislative and administrative focus on attributional nexus, retailers should continue to carefully consider their multistate activities and the related potential sales and use tax exposure.


If you have questions regarding New York State’s remote seller nexus law or other New York tax issues, please contact any of the following Deloitte Tax professionals.

Stephanie Csan
Director Deloitte Tax LLP, Parsippany
+1 973 602 6435
Russell Banigan
Director, Deloitte Tax LLP,
+1 516 918 7283
Abe Teicher
Partner, Deloitte Tax LLP,New York
+1 212 436 3370


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As used in this document, “Deloitte” means Deloitte Tax LLP, a subsidiary of Deloitte LLP. Please see for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

1, LLC v. New York State Department of Taxation and Finance, 20 N.Y. 3d 586 (2013), cert. denied, 2013 U.S, LEXIS 8648 (Dec. 2, 2013);, LLC v. New York State Department of Taxation and Finance, 20 N.Y. 3d 586 (2013), cert. denied, 2013 U.S, LEXIS 8717 (Dec. 2, 2013).
2 Quill Corporation v. North Dakota, 504 U.S. 298 (1992) (holding that an out-of-state retailer with de minimis in-state property and no in-state employees lacked "substantial nexus" in North Dakota under the Commerce Clause).
3 Performance Marketing Association, Inc. v. Brian Hamer, Director Revenue, 2013 IL 114496 (Oct. 18, 2013).

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