Supreme Court Remands Internet Sales Tax Case

The United States Supreme Court unanimously held in Direct Marketing Association v. Brohl that online retailers may litigate a Colorado statute that requires out-of-state online retailers to collect and report customer information on all in-state transactions over $500 to Colorado tax collectors. More specifically, the Court rejected the Tax Injunction Act, invoked by the Tenth Circuit Court of Appeals and remanded the case to the Tenth Circuit for further review. While the Court’s decision may favor large online merchants, Justice Anthony Kennedy wrote a concurrence in which he questioned the holding in Quill Corp v. North Dakota (a 1992 decision that prohibited states from collecting taxes from companies that lack a physical presence on their territory). The Court’s certiorari is now available online.