The U.S. Supreme Court yesterday let stand a Colorado tax law that pressures online retailers to collect sales tax. In its latest order list, the Court announced that it won’t hear a challenge to a February ruling by the 10th U.S. Circuit Court of Appeals that sided with Colorado in a lawsuit from the retail industry. In doing so, the Supreme Court affirmed a Colorado law that compels out-of-state companies to collect sales tax from residents who make online purchases — which got its nickname from the online giant Amazon.com.
Total Retail's Take: Whether states should require online sellers to collect sales tax has been an issue for as long as the internet has been around — more than 20 years. With one-click buying and free-shipping programs, consumers have flocked online to buy nearly a quarter of a trillion dollars of merchandise per year. However, many of those transactions happen without the burden of sales tax. That all may change, thanks to the recent move by the Supreme Court. Opponents of online retailers being required to collect sales tax are concerned that the ruling will encourage other states to adopt similar laws designed to put burdens on out-of-state sellers, particularly since state governments are dependent on sales tax for a major chunk of their budgets. Already, states such as Vermont and Louisiana have taken steps in that direction.