New Mexico Supreme Court rules against Barnes & Noble in internet sales tax dispute

Today the New Mexico Supreme Court held, in New Mexico Department of Taxation & Revenue v., LLC, that the State may impose New Mexico gross receipts tax on Barnes & Noble’s online sales transactions.

In an opinion by Justice Edward Chavez, the Court held that although Barnes & Noble’s website ( and its physical store locations (of which there are three in New Mexico) are owned by two separate corporations, and although the website has no physical presence in New Mexico, internet sales transactions are nevertheless subject to state taxation, and do not violate the federal constitution’s Commerce Clause.

Justice Chavez explained that the internet sales transactions have a “substantial nexus” with New Mexico because the corporation that owns the physical stores (Barnes & Noble Booksellers, Inc.) provides advertising to by listing the website on gift cards, sold memberships in a loyalty program that allows customers to get discounts at, and shared customers’ email addresses with In addition, the Court said the fact that the corporations are under (mostly) common ownership, and share the same trademarks, were factors supporting the decision.

The Court also noted that several other courts disagreed with its Commerce Clause analysis, which raises the possibility of review by the Supreme Court of the United States.

While this decision will likely have a negative effect on New Mexico consumers, I haven’t studied the U.S. Supreme Court’s decisions applying the Commerce Clause to state sales taxes, so I don’t know if it’s the correct legal result.

Do you think this decision is correct? Would the U.S. Supreme Court be interested in reviewing the issue? Please feel free to leave a comment with your opinion.

UPDATE: For press coverage of this decision, Tom Sharpe has this story in the Santa Fe New Mexican, this report ran in the Albuquerque Journal, and Gary Gerew has this report at Morning Edition, the blog of Albuquerque Business First.

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