NY Argues Internet Activity Tax Rule Jibes With Federal Law

New York’s additional income tax obligations on out-of-state online retailers don’t conflict with federal limits on state taxes, the state told an appeals court Monday.

The American Catalog Mailers Association wants the New York Supreme Court, Appellate Division, Third Department, to overturn an April trial court ruling upholding the state’s regulation expanding the reach of its income tax. They argue the rule runs afoul of Public Law 86-272, a federal law that prohibits states from imposing income taxes on out-of-state businesses that only solicit sales of tangible personal property in the state.

New York Attorney General Letitia James (D) ...