NY Court of Appeals Upholds the 'Internet Tax': Amazon and Overstock Lose Challenge

Today the New York State Court of Appeals held that the state's "Internet Tax" did not violate the Commerce or Due Process Clause. 

In regards to the Commerce Clause, the Court stated:
The bottom line is that if a vendor is paying New York residents to actively solicit business in this State, there is no reason why that vendor should not shoulder the appropriate tax burden. We will not strain to invalidate this statute where plaintiffs have not met their burden of establishing that it is facially invalid.
In addition, the Plaintiffs argued that the statute violated the Due Process Clause because the statutory presumption was "irrational and essentially irrebuttable." The Court stated:
In order for the presumption to be constitutionally valid, there must be “a rational connection between the facts proven and the fact presumed, and . . . a fair opportunity for the opposing party to make [a] defense” (Matter of Casse v New York State Racing & Wagering Bd., 70 NY2d 589, 595 [1987]).

Here, the fact proved is that the resident is compensated for referrals that result in purchases. The fact presumed is that at least some of those residents will actively solicit other New Yorkers in order to increase their referrals and, consequently, their compensation.. It is plainly rational to presume that, given the direct correlation between referrals and compensation, it is likely that residents will seek to increase their referrals by soliciting customers.
The Case was decided 4-1. Chief Judge Jonathan Lippman wrote the majority opinion while Judge Robert Smith dissented.