Tuesday, July 28, 2009

A Review of the Development of an Internet Delivered LL.M Program in the United States

- Professor William H Byrnes, IV

A Review of the Development of an Internet Delivered LL.M Program in the United States Professor William H Byrnes, IV
Alternative Methods Suggested by US Academics to Accomplish Goals

Professors Davis and Steinglass suggest that law professors employ complementary teaching methods to the Socratic method to ensure that every student is actively participating and thinking. Some of their suggested methods include such things as requesting students to write their thoughts out in class and bring written responses that will be shared in pairs or small groups in addition to organizing classes to including small group discussions in which students can speak more comfortably and develop ideas that can then be discussed in the larger group, to analyze cases through role playing, the assignment of problems and even creating on-line discussions that will assist students who are wary of speaking in public or of speaking extemporaneously and will address a broader range of subject matter than can be addressed in time-limited classes (Davis and Steinglass, 1997, at 275).

Thiemann suggests a substantially similar list of suggestions to Professors Davis and Steinglass above, adding to it:

(1) a review of actual case files;

(2) narrative story telling; and

(3) take home/midterm/paper options and practice exams.

She goes further to suggest that for the Socratic method to be useful, it must be reformed in three of its fundamental attributes.

First, students should be alerted to the class date of the intended questioning, allowing the student to prepare consistent as with preparing for a day in court (Thiemann, 1998, at 28).

Secondly, the questioning should 'seek to engage not only rational analysis, but also emotional responses' (Id, quoting Williams, 1993).

Finally, the professor should employ role-playing for case analysis[ 20].

Professor Hawkins-Leon states that a combination of the problem method and the Socratic method should be employed in core courses to achieve her stated goals.

There are many positive aspects to this combination approach as presented by Professor Hawkins-Leon[ 21].

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Closely approximates the lawyer's approach to the law. Students must find their own answers to questions rather than merely read and memorize someone else's answer(s);

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Provides training in planning and advising and teaches the skill of organization or issue-management (the organization of a cumbersome set of facts and issues);

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Broadens the range of matters open to consideration by students because they are required to prepare answers to an established problem set;

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Increases the effectiveness of instruction in comparison to the Socratic method;

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Stimulates student interest in legal study, as students are likely to be more prepared for class participation since they have received the problem in advance and can therefore anticipate class discussion;

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Allows the integration of relevant, non-legal source materials (such as economics and psychology), which may lead to a more enriched curriculum and allow students a greater breadth of inquiry. The disadvantage here is that law students often have a tendency to ignore the relevance of non-legal materials;

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Allows and encourages testing of students' understanding of the assigned readings. The AALS 1942 Report stated that 'frequency of examination is...urged as a method for maximizing the efficiency of a teaching program.' In application, the problem method allows for frequent examination of students' performance -- a professor could require answers to various problems to be submitted in writing for review, written comment and grading.

However, the negative aspects are also expressed as presented by Professor Hawkins-Leon: (Idat 10).

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The professor must devote more time to course preparation in order to draft problems and their answers. The creation of textbooks utilizing the problem method of instruction is of immeasurable assistance. Course books for some subjects already exist and some problem books have been created for use with a standard textbook. Students are also required to be more consistent in their class preparation and may have to spend more time preparing for class;

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The problem method is more costly than the Socratic method because its usage is most effective in smaller classes. Research has shown that ideally no more than 40 students should be enrolled in a course taught by the problem method. This factor causes the problem method to be more costly than the Socratic method, which is ideal for large class sizes;

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Professors are not as much at liberty to teach via lecture when the problem method is utilized;

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Due to the in-depth discussion of individual problems, critics fear that less course material is covered when the problem method is utilized. Contrary to this concern the results of the 1966 AALS survey showed that professors utilizing the problem method covered more course material.

Professor Kerper's suggestion is to supplement the application of the IRAC method to case analysis with problem solving methods, including what she acronyms 'SOLVE'[ 22]. Her suggested problem solving method acronym involves: a Statement of the problem, Observing and organizing the problem through the identification of initial conditions, goals, resources and constraints, Learning by questioning all parts of the problem, to Visualize Possible Solutions and to Employ the Solution and Monitor Results[ 23].

Professor Donahoe suggests that students play out case studies, working both alone and in groups (Donahue 2000, at para. 64). The case studies may be in the form employed in most law exams: factual hypothetical, problem sets, or actual facts from an appellate case. The class time should be used to explore the various methods of researching and resolving the case study. When using an appellate case, the decision should serve as a comparative model answer after the classroom exploration.

EXTRACT from: A Review of the Development of an Internet Delivered LL.M Program in the United States
Professor William H Byrnes, IV

Transfer Pricing - Transfer Pricing Controversy in the Recession WEBINAR

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Onesource Transfer Pricing - Transfer Pricing Controversy in the Recession

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Monday, July 20, 2009

US makes dent in the tax gap

US makes dent in the tax gap International Tax Review The US Treasury has told the Senate Finance Committee that the federal tax gap has fallen from about $345 billion in 2005 to about $290 billion now. The reduction has come mainly from enforcement actions and other late payments, officials said. Senator Max Baucus, the chairman of the committee, asked the Treasury in May for an update to its September 2006 and August 2007 reports on the tax gap. The update covers how to reduce the federal tax gap and improve voluntary compliance. The Treasury said it would be able to review the issue, which describes the difference between the amount of taxes owed and collected, more frequently because of an increase in funding included in the Internal Revenue Service's 2009 budget. The report gives a comprehensive overview of efforts to close the tax gap, discussing many proposals outlined in the recent budget.
US makes dent in the tax gap
International Tax Review

The US Treasury has told the Senate Finance Committee that the federal tax gap has fallen from about $345 billion in 2005 to about $290 billion now. The reduction has come mainly from enforcement actions and other late payments, officials said.

Senator Max Baucus, the chairman of the committee, asked the Treasury in May for an update to its September 2006 and August 2007 reports on the tax gap.

The update covers how to reduce the federal tax gap and improve voluntary compliance. The Treasury said it would be able to review the issue, which describes the difference between the amount of taxes owed and collected, more frequently because of an increase in funding included in the Internal Revenue Service's 2009 budget.

The report gives a comprehensive overview of efforts to close the tax gap, discussing many proposals outlined in the recent budget.

The report repeated the seven components to the Treasury's strategy for minimising non-payment of taxes: reduce opportunities for evasion; make a multi-year commitment to research; continue improvements in information technology; improve compliance activities; enhance taxpayer service; reform and simplify the tax law and coordinate with partners and stakeholders.

Baucus said the report showed the IRS was working to identify problems, improve tax adminstration and set short-term compliance goals. "However, more specific long-term goals, measures and timelines for an improved rate of tax compliance and a reduction in the amount of lost tax revenues are necessary for the IRS to effectively focus its resources and evaluate its progress on an ongoing basis," he said.

President Obama has made addressing under-reporting of income earned or held through offshore accounts or entities a priority for his administration, developing an extensive plan to combat offshore tax evasion by US taxpayers that includes legislative proposals, efforts to increase exchange of tax information with other countries and increased enforcement.

The report said access to information from other countries is critically important to combating offshore tax evasion. And the authors of the report on to brag that the US has been a leader in increasing information exchange in tax matters, working through the OECD to establish standards on transparency and exchange of information for tax purposes, and strongly encouraging countries to adopt these standards.

Among the groups the report lists as important to establish good communication and information sharing links with are the Joint International Tax Shelter Information Centre (Jitsic) and the Leeds Castle Group, a larger body of tax administrations, which it said boasts many Asian members, who do not always join such discussion groups.

The update notes that the IRS and Treasury, working with Congress, are also pursuing a wide range of initiatives aimed at better voluntary compliance to help close the tax gap. Making the tax filing process easier and more taxpayer-friendly is high on the list. Aggressive enforcement activity is also seen as important, but the publication does note that "increased enforcement efforts require certain trade-offs." Acknowledging that any changes must be made sensitive to the demands placed on all taxpayers, not only those dodging the system.

"The Administration is committed to working closely with Congress to strike an appropriate balance to maximize revenue collection without imposing unreasonable compliance and enforcement burdens on the vast majority of individuals and businesses that fully and willingly pay what they owe," the report concludes.

USA - Take Special care with S Corporation payment to Shareholders - Loan, Distribution, or Wages?

S Corporation payment to Shareholders - Loan, Distribution, or Wages? By Manendra Kothari Any salary to an S corporation shareholder-employee that is below a reasonable amount is a red flag to the IRS and subject to IRS scrutiny, especially when the salary is zero. The IRS not only attempt to collect total FICA tax and FUTA tax, but it may also collect penalties from the corporation for not filing its employment tax returns (Forms 940 and 941), for late deposit of the employment taxes, and also for failure to withhold income taxes on shareholder-employee’s salary. IRS may also impose penalty up to 20% for negligence, careless, reckless, or intentional disregard of the rules and regulations. Re-characterization of distributions and loans as salaries can seriously impact cash flow of Shareholder or an S Corporation.
S Corporation payment to Shareholders - Loan, Distribution, or Wages?

By Manendra Kothari

Any salary to an S corporation shareholder-employee that is below a reasonable amount is a red flag to the IRS and subject to IRS scrutiny, especially when the salary is zero. The IRS not only attempt to collect total FICA tax and FUTA tax, but it may also collect penalties from the corporation for not filing its employment tax returns (Forms 940 and 941), for late deposit of the employment taxes, and also for failure to withhold income taxes on shareholder-employee’s salary. IRS may also impose penalty up to 20% for negligence, careless, reckless, or intentional disregard of the rules and regulations. Re-characterization of distributions and loans as salaries can seriously impact cash flow of Shareholder or an S Corporation.

When S corporation officers perform services for the corporation, and receive or are entitled to receive payments, their compensation is generally considered wages. Subchapter S corporations should treat payments for services to officers as wages and not as distributions of cash and property or loans to shareholders.

Any officer of a corporation, including S corporations, is an employee of the corporation for federal employment tax purposes. The fact that an officer is also a shareholder does not change the requirement that payments to the corporate officer be treated as wages. S corporations should not attempt to avoid paying employment taxes by having their officers treat their compensation as cash distributions, payments of personal expenses, and/or loans rather than as wages. Courts have consistently held that S corporation officer/shareholders who provide more than minor services to their corporation and receive or are entitled to receive payment for services are employees whose compensation is subject to federal employment taxes.

There is an exception for an officer of a corporation who does not perform any services or performs only minor services and who neither receives nor is entitled to receive, directly or indirectly, any remuneration. Such an officer would not be considered an employee.

What’s a Reasonable Salary?

The instructions to the Form 1120S, U.S. Income Tax Return for an S Corporation, state “Distributions and other payments by an S corporation to a corporate officer must be treated as wages to the extent the amounts are reasonable compensation for services rendered to the corporation.”

There are no specific guidelines for reasonable compensation in the Code or the Regulations. The various courts that have ruled on this issue have based their determinations on the facts and circumstances of each case.

Some factors considered by the courts in determining reasonable compensation:

Training and experience
Duties and responsibilities
Time and effort devoted to the business
Dividend history
Payments to non-shareholder employees
Timing and manner of paying bonuses to key people
What comparable businesses pay for similar services?
Compensation agreements
The use of a formula to determine compensation

Medical Insurance Premiums treated as wages.

The health and accident insurance premiums paid on behalf of the greater than 2 percent S corporation shareholder-employee are deductible by the S corporation as fringe benefits and are reportable as wages for income tax withholding purposes on the shareholder-employee’s Form W-2. They are not subject to Social Security or Medicare (FICA) or Unemployment (FUTA) taxes. Therefore, this additional compensation is included in Box 1 (Wages) of the Form W-2, Wage and Tax Statement, issued to the shareholder, but would not be included in Boxes 3 or 5 of Form W-2.

A 2-percent shareholder-employee is eligible for an AGI deduction for amounts paid during the year for medical care premiums if the medical care coverage is established by the S corporation.

We have considered the situation where an S corporation is paying reasonable compensation to its shareholder-employee. The motive and desired tax position of IRS and taxpayers might be opposite for a C Corporation. IRS always scrutinize paying more than reasonable compensation in case of a C Corporation, while paying less then reasonable compensation in case of an S Corporation.

Monday, July 13, 2009

USA UBS, DOJ Seek Stay in Tax Case By CARRICK MOLLENKAMP

UBS, DOJ Seek Stay in Tax Case By CARRICK MOLLENKAMP UBS AG and the U.S. Justice Department jointly have asked a federal court to postpone a hearing scheduled for Monday in order to give the two sides a chance to negotiate a settlement and potentially allow UBS to avoid turning over thousands of client names to the Internal Revenue Service.
BUSINESS NEWS
UBS, DOJ Seek Stay in Tax Case
By CARRICK MOLLENKAMP

UBS AG and the U.S. Justice Department jointly have asked a federal court to postpone a hearing scheduled for Monday in order to give the two sides a chance to negotiate a settlement and potentially allow UBS to avoid turning over thousands of client names to the Internal Revenue Service.

In a filing Sunday morning, UBS and the Justice Department asked that the hearing in Miami be rescheduled for Aug. 3 and 4 if an agreement couldn't be reached. The move staves off what had been an increasing diplomatic fight between the U.S. and Swiss governments over whether Swiss privacy law allowed UBS to hand over the information.

The request for a stay gives UBS time to try and figure out how it can potentially deliver some information to the Justice Department and the IRS without turning over some 52,000 account holders that the IRS seeking as part of a months-long tax-evasion investigation.

That investigation, aided initially by a former UBS private banker, in February forced UBS to agree to a $780 million criminal settlement and an agreement to turn over more than 200 account holders. Those names were turned over because of allegations of tax fraud. Those allegations allowed UBS to hand over the information without violating Swiss privacy laws.

A parallel civil inquiry led by the IRS was aimed at forcing UBS to turn over the 52,000 names. The effort by the IRS to obtain that information had escalated into a diplomatic row and led the Swiss government to say in a court filing that it was prepared to seize any UBS data.

Write to Carrick Mollenkamp at carrick.mollenkamp@wsj.com

USA Tax Court: LLCs Not Subject to Limited Partnership Passive Loss Disallowance Rule

Tax Court: LLCs Not Subject to Limited Partnership Passive Loss Disallowance Rule Section 469(h)(2) treats a limited partnership interest as presumptively passive for purposes of the passive loss rules, with the result that partnership losses cannot offset the limited partner's salary or investment income. In Garnett v. Commissioner, 132 T.C. No. 19 (June 30, 2009), the Tax Court held that LLC interests are not subject to § 469(h)(2), with the result that members of LLCs can deduct LLC losses if they can prove that they materially participated in the LLC under the general rule of § 469(h)(1),

The Wall Street Journal discusses the importance of the Garnett decision in Entrepreneurs Win Tax Case Versus IRS; Losses on Business Investments Can Be Deducted Against Salary, Other Income; An Appeal?, by Laura Sanders:

The IRS lost a key battle in its long-running fight to limit tax deductions that can be taken by investors in small businesses in a case that could have wide implications for entrepreneurs.

The Tax Court decision would allow investors in certain kinds of businesses to deduct losses against salary and investment income. Right now, investors often can only deduct losses in a business against future profits from that business, which in some cases prevents taxpayers from getting to use the deductions at all.

The case, which involved Nebraska farmers seeking to deduct losses from their chicken and pig operations, can still be appealed by the IRS, but makes loss deductions much easier to obtain for some investors. ...

The decision specifically applies to investors in limited-liability companies and limited-liability partnerships and benefits those who actively work in several businesses. One example would be a Microsoft engineer who owns a stake in a local restaurant and tends bar twice a week. His spouse, meanwhile, is a part owner of a money-losing gift shop, where she works a few hours a week. Under this decision, losses from the two businesses could offset salary or investment income earned by both.

The IRS has long taken the position that losses generated by businesses held within LLPs and LLCs can't generally be used to offset salary and investment income. The IRS position has had the effect of forcing investors in LLPs and LLCs to delay loss deductions, sometimes for years.

IRS Overlooks Hundreds of Big Overdue Accounts

IRS Overlooks Hundreds of Big Overdue Accounts Washington, D.C. (July 9, 2009) By WebCPA Staff The Internal Revenue Service has shelved hundreds of balance-due accounts for taxpayers who owe more than $1 million. A new report from the Treasury Inspector General of Tax Administration found that as of Dec. 22, 2007, there were 2,454 individual taxpayers in the IRS’s potentially collectible inventory each owing over $1 million in taxes, interest and penalties. The IRS was actively pursuing 2,006 of the delinquent taxpayers for collection, but TIGTA identified 448 accounts totaling approximately $1.2 billion that were in a queue awaiting field assignment or had been shelved. Among the 448 accounts, 214 accounts were in a queue or in shelved status for more than a year. Using automated information systems and the IRS’s fiscal year 2007 collection rate to review a statistically valid sample of 155 accounts, TIGTA determined that $12.1 million might be collectible from 27 taxpayers who owed a total of approximately $110 million.


IRS Overlooks Hundreds of Big Overdue Accounts
Washington, D.C.
(July 9, 2009)
By WebCPA Staff

The Internal Revenue Service has shelved hundreds of balance-due accounts for taxpayers who owe more than $1 million.

A new report from the Treasury Inspector General of Tax Administration found that as of Dec. 22, 2007, there were 2,454 individual taxpayers in the IRS’s potentially collectible inventory each owing over $1 million in taxes, interest and penalties. The IRS was actively pursuing 2,006 of the delinquent taxpayers for collection, but TIGTA identified 448 accounts totaling approximately $1.2 billion that were in a queue awaiting field assignment or had been shelved.

Among the 448 accounts, 214 accounts were in a queue or in shelved status for more than a year. Using automated information systems and the IRS’s fiscal year 2007 collection rate to review a statistically valid sample of 155 accounts, TIGTA determined that $12.1 million might be collectible from 27 taxpayers who owed a total of approximately $110 million.
TIGTA determined that three factors contributed to the large dollar accounts lingering in the queue or shelved status. First, IRS officials were working to resolve a programming flaw that allowed accounts to remain in shelved status even when the taxpayer’s account reached a balance of $1 million or more. Second, TIGTA found erroneous codes that were preventing some accounts from appearing in the group managers’ inventory in the IRS’s Entity Case Management System. Third, the Entity system is currently programmed to identify and accelerate accounts with assessments of $1 million or more, but does not take into consideration the related interest and penalty accruals that continue to add to the total account balance owed until they are paid or otherwise satisfied.

TIGTA recommended that IRS officials make programming changes and explore the cost and benefits associated with changing the Entity acceleration criteria of $1 million to include penalties and interest accruals. In response, IRS officials agreed with the recommendations.

USA Treasury Department Releases Updated Tax Gap Report

Treasury Department Releases Updated Tax Gap Report The Treasury Department yesterday delivered an Update on Reducing the Federal Tax Gap and Improving Voluntary Compliance to Senate Finance Committee Chair Max Baucus:

Building on reports previously released, this report is intended to provide a comprehensive overview of efforts to close the tax gap. This report is also intended to serve as a baseline for further work and discussion. After briefly discussing the nature and scope of the tax gap, this report summarizes previous Treasury and IRS tax gap reports and identifies the areas of strategic priority detailed in those reports. This report then summarizes the achievements, ongoing efforts, and new initiatives for achieving progress in each of those areas of strategic priority, organized according to the components of the strategy to reduce the tax gap detailed in prior reports.

As this report will make clear, the IRS and Treasury, working with Congress, are pursuing a wide range of initiatives, including a series of legislative proposals included in the Administration’s FY 2010 budget. The Administration recognizes the particular value of those efforts and initiatives that improve voluntary compliance by making the tax filing process easier and more taxpayer-friendly. While aggressive enforcement activity can also help to narrow the tax gap, it is important to recognize that increased enforcement efforts require certain trade-offs. The Administration is committed to working closely with Congress to strike an appropriate balance to maximize revenue collection without imposing unreasonable compliance and enforcement burdens on the vast majority of individuals and businesses that fully and willingly pay what they owe.

Monday, July 6, 2009

Do Attorneys Do Their Clients Justice? An Empirical Study of Lawyers' Effects on Tax Court Litigation Outcomes

- Leandra Lederman Indiana University-Bloomington - Maurer School of Law & Warren B. Hrung Federal Reserve Bank of New York

Do Attorneys Do Their Clients Justice? An Empirical Study of Lawyers' Effects on Tax Court Litigation Outcomes Leandra Lederman Indiana University-Bloomington - Maurer School of Law Warren B. Hrung Federal Reserve Bank of New York Wake Forest Law Review, Vol. 41, p. 1235, 2006 Indiana Legal Studies Research Paper No. 49 Abstract: Do attorneys really add value or can unrepresented parties achieve equivalent results? This fundamental question ordinarily is difficult to answer empirically. An equally important question both for attorneys and the justice system is whether attorneys prolong disputes or instead facilitate expeditious resolution of cases.


Fortunately, there is a federal court that provides an excellent laboratory in which to test and answer these questions. In the United States Tax Court (Tax Court), where most federal tax cases are litigated, the government always is represented by Internal Revenue Service attorneys but a large portion of the taxpayer litigants proceed pro se. In addition, the Tax Court is exceptional in that it maintains files on cases that settle. Furthermore, Tax Court disputes involve money, so case outcomes can be readily compared. These institutional characteristics provide the rare opportunity to isolate the effects of lawyers on outcomes in both settled and tried cases.

In order to assess the predicted and actual impacts of attorneys on case outcomes, the article identifies five distinct ways in which attorneys typically differ from unrepresented parties and explores how each of those characteristics may affect case outcomes. The article then exploits the opportunity afforded by the institutional features of the Tax Court; using a unique database of randomly selected cases, the study tests the impact of attorneys on financial outcomes in both tried and settled cases. It also tests the effects of attorneys on time to settlement and time to trial.

Interestingly, the study found that the presence of an attorney for the taxpayer significantly improved the taxpayer's financial outcome in tried cases, an effect that increased with the experience of the attorney. No such effect existed in settled cases. Although the latter result initially is surprising, it highlights the paramount importance of procedural expertise in formal trial proceedings, as opposed to negotiations with the opposing party. The study also found that the presence of an attorney for the taxpayer did not affect time elapsed to trial or settlement. Thus, the study found that taxpayers' attorneys, who generally are paid by the hour, neither prolonged disputes nor expedited their resolution but did significantly improve the financial outcomes of the cases they tried.

Keywords: lawyers, lawsuits, settlement, litigation, justice system, dispute resolution, judges, taxation, Tax Court, empirical study

Thursday, July 2, 2009

New York State's 'Amazon Law' Draws a Bright-Line in the Sand

New York State's 'Amazon Law' Draws a Bright-Line in the Sand

Source: Rachel M. Stephens

In the realm of sales and use tax nexus, the bright-line physical presence requirement established by National Bellas Hess and Quill has been the standard for determining whether certain business activities constitute more than the slightest presence in a jurisdiction, thereby requiring a seller to register to collect sales and use taxes on behalf of that jurisdiction.

On April 23, 2008, New York state amended its tax law, expanding the definition of a vendor required to collect and remit sales and use taxes. Effective June 1, 2008, under New York State Tax Law §1101(b)(8)(iv), a seller is considered to be a vendor if both of the following conditions are met:

1. The seller enters into an agreement or agreements with a New York state resident or residents under which, for a commission or other consideration, the resident representative directly or indirectly refers potential customers to the seller, whether by link on an Internet web site or otherwise. A resident representative would be indirectly referring potential customers to the seller where, for example, the resident representative refers potential customers to its own web site, or to another party’s web site which then directs the potential customer to the seller’s web site.
2. The cumulative gross receipts from sales by the seller to customers in New York state as a result of referrals to the seller by all of the seller’s resident representatives under the type of contract or agreement described above total more than $10,000 during the preceding four quarterly sales tax periods. NYS TSB-M-08(3)S



On April 25, 2008, two days after New York state amended its law, online retailer Amazon.com filed suit in New York Supreme Court asserting that the law violates the due process and equal protection clauses of the federal and state constitutions by: violating the commerce clause with its presumption that affiliates with New York residency will solicit business in New York and by specifically targeting the online retailer. In May 2008, online retailer Overstock.com filed a companion suit in New York State Supreme Court and the retailer ended its affiliate relationships with New York residents. On June 1, 2008, Amazon.com began collecting and remitting New York sales tax under protest.

Prior to the law change, both Amazon.com and Overstock.com utilized a network of affiliates to advertise by way of establishing links on the affiliates’ web sites that direct potential customers to the online retailers’ web sites or allow customers to purchase the online retailers’ products directly from the affiliates’ web sites. The affiliates are then paid a commission based on the percentage of revenue generated from the sales of products via the links.

New York Supreme Court rendered decisions on January 12, 2009, that upheld the new law and dismissed both suits with the reason of failure to state a cause of action.

The new law in New York has prompted additional states to introduce similar laws in an attempt to recover lost tax revenue resulting from an increase in online purchases from retailers without a sales tax collection responsibility in their jurisdictions. California, Connecticut, Minnesota, and Vermont are among several states that have bills modeled on New York’s “Amazon Law.” However, these bills are having a difficult time making their way out of state assemblies. During the California Assembly’s April 27, 2009, hearing, the Committee on Revenue and Taxation voted to remove Assembly Bill 178, nicknamed the Amazon Tax Bill, from the docket, providing online retailers in the state with relief for another year.

With states continually in search of methods to increase revenue, it is likely that more states will write bills targeted at online sellers and in response, we can expect more suits challenging the constitutionality of virtual physical presence.

Thomson Reuters offers as full range of corporate tax solutions. For more information on our Sales & Use Tax solutions, please visit our website.

About the Author
Rachel M. Stephens joined Thomson Reuters as manager of consulting and workflow processes in 2008. With more than 15 years of experience in state and local tax, she possesses expertise in sales and use tax including audit defense, nexus studies, voluntary disclosures, due diligence, and compliance. Prior to joining Thomson Reuters, Stephens was a tax manager at a multibillion dollar telecommunications corporation. In this capacity, she managed the sales and use tax responsibilities for the corporation’s non-regulated affiliates and supervised a staff of state and local tax professionals. Stephens graduated from St. John’s University with a B.S. in Accounting. She received her Masters in Taxation from St. John’s University Tobin College of Business.