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- Title
NEW MEXICO TAXATION & REVENUE DEPARTMENT V. BARNES AND NOBLE.COM LLC: RECONSIDERING THE DORMANT COMMERCE CLAUSE IN AN E-COMMERCE WORLD.
- Authors
Wolongevicz, Lauren Joseph
- Abstract
Vacationing off the coast of Belize on a remote Central American island, I bought a book from Amazon's website while on a dock 100 yards into the ocean. Within seconds the book was downloaded onto my Kindle. From my hammock I marveled at the ease and simplicity of one-click purchasing without even considering the tax implications. My experience is far from unique. E-commerce is a way of life for American consumers, which has tangible consequences for retailers and states. Brick-and-mortar bookstores are forced out of business because of online competition. Black Friday is not what it once was. Consumers now wait until Cyber Monday to make their holiday purchases to avoid long lines and sales taxes. But our collective online shopping experience may soon change. A number of states have passed the so-called "Amazon tax," which requires Internet retailers to collect taxes if they have in-state affiliates. The Amazon tax and similar laws are designed to make up for the more than $20 billion in revenue states are losing each year due to online commerce. According to the Congressional Research Service, e-commerce has caused states to lose out on almost a third of their total tax revenue. Because of the losses, many states are considering unconventional ways to bring Internet retailers within their state's tax jurisdiction. This Comment explains when the dormant Commerce Clause allows states to tax Internet retailers. The New Mexico Supreme Court faced that issue in New Mexico Taxation & Revenue Department v. Barnesandnoble.com LLC. The court held that New Mexico could impose gross receipts tax on an Internet retailer because of a relationship with an in-state sister corporation, which created a substantial nexus with the state. This Comment analyzes the court's opinion and uses that case as a lens to explore how other states deal with taxation of Internet retailers. In particular, this Comment discusses a New York case where a court found that the Amazon tax was constitutional and the U.S. Supreme Court's subsequent denial of certiorari in that case. This Comment argues that the New Mexico decision provides a practical approach to Internet retailer cases, including situations where retailers have affiliate agreements with in-state residents. According to the New Mexico court, there is a substantial nexus when a retailer "establish[es] and maintain[s] a market" within a state because of the economic presence of the retailer. This Comment also contends that the Supreme Court missed an opportunity to modernize its dormant Commerce Clause jurisprudence when it denied certiorari in the New York case. It should have replaced an outdated physical presence requirement with an economic presence test to reflect the realities of the Digital Age.
- Subjects
UNITED States; BARNESANDNOBLE.COM LLC; DORMANT commerce clause (Constitutional law); ELECTRONIC commerce tax laws; SALES tax; ONLINE shopping; GOVERNMENT revenue; STATE taxation laws; NEW Mexico. Supreme Court; TAXATION; LAW; ACTIONS &; defenses (Law)
- Publication
Denver University Law Review, 2014, Vol 91, Issue 3, p741
- ISSN
0883-9409
- Publication type
Article