It's an interesting day when Amazon's efforts to build delivery drones look more promising than its efforts to fight state tax laws.
The U.S. Supreme Court today refused to hear appeals by Amazon.com and Overstock.com against a New York state law that requires them to charge sales tax despite not the companies not having a physical presence in the state. The e-commerce giants were looking to overturn a ruling made by a lower court that upheld the law in March.
Generally, web retailers do not collect sales tax in states where they lack warehouses or other physical operations. But in New York and several other states, a retailer is considered to have a physical presence if it uses "in-state affiliates," meaning people or businesses that refer customers to the site and earn sales commission.
In its petition to the Supreme Court filed in August, Amazon claimed that upholding the New York state law would "significantly and unduly burden interstate commerce," and would serve as a "road map for other jurisdictions to inflict similar burdens on interstate commerce."
The decision may entice more states to enforce similar laws as they seek ways to generate more revenue. States lost an estimated $23 billion in 2012 as a result of not being able to collect sales tax revenue on remote sales, according to a statement by the National Conference of State Legislatures in September.