The U.S. Supreme Court ruled in Quill v. North Dakota that the U.S. Constitution mandates that an out-of- state taxpayer must have a physical presence in a state before such state may require the taxpayer to collect a sales or use tax. The New York Court of Appeals previously ruled that New York’s “Amazon” law, attributing physical presence to an out-of-state taxpayer by virtue of such taxpayer’s contractual relationships with in-state persons, is constitutional. The U.S. Supreme Court recently denied Amazon and Overstock’s petition for writ of certiorari seeking review of the New York Court of Appeals decision.

Several states currently have or are considering adopting “Amazon” laws. The New York Court of Appeals decision, even though it is not binding on other states, and the U.S. Supreme Court’s denial of certiorari will likely give other states comfort that similar laws can withstand scrutiny. The U.S. Supreme Court suggested in Quill that Congress “may be better qualified to resolve” the extent to which the physical presence standard should extend or whether a different standard should apply. Several pieces of federal legislation have been proposed over the years to address this issue, without any resolution. Unless Congress acts to resolve this issue, litigation challenging Amazon laws will likely continue in other states.