Online retailers that have a physical presence within a state must collect state taxes on any Web sales made to residents of that state. Sell2U.com Inc., an online retailer based in California, pays Tracker Web Services, which is located within New York, to direct traffic to Sell2U.com's site. If Sell2U.com must collect and remit taxes on its sales to New York residents, it is most likely because
A)Sell2U.com's deal with Tracker falls within New York's definition of physical presence.
B)Congress has explicitly chosen to tax Internet sales.
C)the United States Supreme Court has ruled that a state can compel an out-of-state business to collect and remit state taxes.
D)New York requires its residents to self-report their purchases and pay use taxes to the state.

Question

Quizplus · Accepted Answer

Sell2U.com's arrangement with Tracker Web Services in New York likely establishes a physical presence in the state according to New York's tax laws, thus requiring Sell2U.com to collect and remit taxes on sales to New York residents.

Online Retailers That Have a Physical Presence Within a State