January 13, 2009 / 6:50 PM / 9 years ago

NY judge tosses Amazon.com lawsuit over sales tax

<p>A box from Amazon.com is pictured on the porch of a house in Golden, Colorado July 23, 2008.Rick Wilking</p>

SAN FRANCISCO (Reuters) - A New York judge has tossed out a lawsuit brought by Amazon.com Inc that challenged the state's right to collect sales tax from out-of-state Internet retailers.

New York State Supreme Court Justice Eileen Bransten wrote in an order released Tuesday that "there is no basis upon which Amazon can prevail."

A spokeswoman for Amazon, the world's largest Internet retailer, said the company had no comment.

The original complaint, filed last April, argued that a newly-enacted tax statute in New York was unconstitutional, overly broad and vague.

Through Amazon's "Associates Program," the company pays unaffiliated Web site operators across the country a commission if they advertise Amazon on their sites. Those ads often allow consumers to click through from the advertiser's Web site to Amazon.com.

Under New York law, that amounted to solicitation of business in the state.

Amazon argued in its complaint that it has no "substantial" physical presence in New York and that independent advertisers are not authorized to act as agents for the company.

Amazon had sought the law to be declared invalid and its legal costs for the proceedings paid.

In the order filed on Monday, Judge Bransten wrote that the Seattle-based retailer failed in its claim that its associates based in New York do not solicit business from customers in that state.

She wrote that the law was "carefully crafted" and did not broadly tax all Internet sales, nor did it unfairly target Amazon. A similar lawsuit brought by rival Overstock.com Inc was also dismissed.

Amazon shares fell 1.2 percent to $51.28.

Reporting by Alexandria Sage and Edith Honan; Editing by Derek Caney

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