New York Appellate Division Upholds 'Amazon' Law: Analysis

19 Pages Posted: 22 Dec 2010

See all articles by Edward A. Zelinsky

Edward A. Zelinsky

Yeshiva University - Benjamin N. Cardozo School of Law

Date Written: December 21, 2010


In LLC et al. v. New York State Department of Taxation and Finance et al., the Appellate Division of the New York Supreme Court upheld and remanded New York’s “Amazon” law. The appeals court correctly held that the New York statute, on its face, comports with the dormant Commerce Clause physical presence nexus test articulated in National Bellas Hess v. Department of Revenue and confirmed in Quill Corporation v. North Dakota. The Appellate Division also correctly held that, on its face, New York’s Amazon law complies with the requirements of Due Process though, on this point, the Appellate Division’s opinion reaches the right result in an unconvincing fashion.

On remand to the trial court, of critical import will be the informal administrative construction of New York’s Amazon statute by New York’s Department of Taxation and Finance (“the Department”). The Department concludes that, under the Amazon statute, a New York associate’s unauthorized solicitation activity generates in-state physical presence nexus between New York and the internet seller with which such associate is affiliated. This interpretation of the statute contravenes the dormant Commerce Clause case law of the U.S. Supreme Court and should accordingly be rejected by the New York courts. There is no agency when there is no authority.

The constitutionality of New York’s Amazon law does not ensure the law’s wisdom. Indeed, as a matter of tax policy, New York’s Amazon law is unwise. For the long run, New York’s Amazon statute will cost New York more revenue than New York gains as Amazon and other out-of-state internet retailers will respond to the statute by terminating their associates in the Empire State. The best resolution of the problem addressed by New York’s and other states’ Amazon laws is for Congress to legislate pursuant to the Commerce Clause to permit the states to impose sales and use tax enforcement responsibilities on internet (and mail order) sellers regardless of such sellers’ physical presence vel non in the taxing state.

Keywords: Internet Sales, Mail Order Sales, Electronic Commerce, Dormant Commerce Clause, Due Process Clause, Sales and Use Tax, Nexus, Physical Presence, Quill, National Bellas Hess, Amazon Law, New York Sales and Use Tax, Internet Associates, Appellate Division, Agency

Suggested Citation

Zelinsky, Edward A., New York Appellate Division Upholds 'Amazon' Law: Analysis (December 21, 2010). State Tax Notes, 2011, Cardozo Legal Studies Research Paper No. 317, Available at SSRN:

Edward A. Zelinsky (Contact Author)

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

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