N.M. Taxation & Revenue Dep’t. v. Barnesandnoble.com, LLC

The issue on appeal before the Supreme Court in this case centered on whether an out-of-state internet retailer, Barnesandnoble.com LLC (bn.com), which has no physical presence in New Mexico other than through stores owned by a sister corporation, Barnes & Noble Booksellers, Inc., is subject to New Mexico gross receipts tax on its sales to New Mexico residents without offending the federal Commerce Clause. The answer to this question depended on whether Booksellers engaged in activities in New Mexico on behalf of bn.com that were significantly associated with bn.com's ability to establish and maintain a market for its sales in New Mexico, thus creating a substantial nexus between bn.com and New Mexico. Upon review, the Supreme Court concluded that Booksellers did engage in such activities, which included: (1) Booksellers' promotion of bn.com through sales of gift cards redeemable at bn.com and bearing bn.com's name; (2) Booksellers' policy of sharing customers' email addresses with bn.com; (3) Booksellers' implicit endorsement of bn.com through the companies' shared loyalty program and Booksellers' return policy; and (4) Booksellers' in-state use of Barnes & Noble logos and trademarks, which bn.com also used. Therefore, the Court held that Booksellers' in-state activities were sufficient to create a substantial nexus between bn.com and New Mexico, so that the state could tax bn.com's sales to customers in New Mexico without offending the federal Commerce Clause. View "N.M. Taxation & Revenue Dep't. v. Barnesandnoble.com, LLC" on Justia Law