New York’s 'Amazon Law': Constitutional But Unwise

44 Pages Posted: 30 Nov 2009

See all articles by Edward A. Zelinsky

Edward A. Zelinsky

Yeshiva University - Benjamin N. Cardozo School of Law


On its face, New York’s Amazon Law can be construed to survive constitutional scrutiny, but only if the courts reject (as they should) part of the administrative gloss which New York’s Department of Taxation and Finance (“the Department”) places on the statute. The New York statute imposes the obligation to collect New York use tax upon internet sellers only when such sellers’ in-state affiliates, by their solicitation activities, satisfy the dormant Commerce Clause nexus test of physical presence in the taxing state. Moreover, the statute operates through a rebuttable presumption which can be construed by the New York courts to satisfy the requirements of Due Process.

On the other hand, much of the gloss which the Department places administratively on the Amazon Law is constitutionally infirm. The Department indicates that in-state solicitation which the out-of-state internet seller affirmatively forbids will nevertheless be imputed to the out-of-state seller to obligate the seller to collect use tax from New York purchasers. This informal administrative position improperly imputes unauthorized in-state activity to an out-of-state internet seller who prohibits such activity. There is no agency when there is no authority.

As a matter of tax policy, the Amazon Law is unwise. At best, that law will raise no revenue, but will merely create one more nuisance for firms selling products into the Empire State. More likely, the new law will lose more revenue for New York than it gains by inducing out-of-state internet retailers to cancel their affiliate programs in New York. If so, New Yorkers will no longer receive commissions as Amazon affiliates and, as a result, will no longer pay state income taxes on those commissions.

Amazon and other web-based sellers should be required to collect and remit the various states’ use taxes. However, rather than proceeding unilaterally, the states are better advised to pursue the difficult, but ultimately more appropriate, course of federal legislation requiring out-of-state sellers to collect use tax on behalf of the states into which they sell.

Keywords: New York, Amazon Law, use tax, dormant Commerce Clause, nexus, internet sellers, Quill, physical presence, presumptions

Suggested Citation

Zelinsky, Edward A., New York’s 'Amazon Law': Constitutional But Unwise. State Tax Notes, Forthcoming, Cardozo Legal Studies Research Paper No. 279, Available at SSRN:

Edward A. Zelinsky (Contact Author)

Yeshiva University - Benjamin N. Cardozo School of Law ( email )

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212-790-0277 (Phone)

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