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Ruling against Internet giants Amazon.com and Overstock.com, New York’s top court said Thursday that out-of-state companies must collect state sales tax on web transactions with New Yorkers.

Amazon and Overstock had challenged a 2008 law that required Internet vendors to collect state sales taxes on sales to New York residents, claiming it violated federal commerce laws and their constitutional rights to due process.

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The Court of Appeals rejected that argument in a 4-1 decision.

The majority discarded the companies’ argument that they must have a “physical presence” in New York to be subject to state sales taxes. It concluded that the “plaintiffs have failed to demonstrate that the (tax law) is facially unconstitutional under either the Commerce clause or the Due Process clause.”