Online Merchants Ask Judges to Curb NY Income Tax Expansion

New York’s additional income tax obligations on out-of-state online retailers conflicts with federal law, a trade group for internet sellers told a state appeals court.

“The Internet Activities Rule expresses a policy preference not a credible reading of the federal statute,” the American Catalog Mailers Association told the New York Supreme Court, Appellate Division, Third Department. Only Congress can update the scope and meaning of Public Law 86-272, the group said in a brief filed July 25.

The association, which is rebranding as the American Commerce Marketing Association, wants the court to overturn an April trial court ruling upholding ...