Dive Brief:

• The U.S. Supreme Court on Monday declined, without comment, to take up appeals with Colorado’s e-commerce tax law, passed in 2010 but left in legal limbo, which would require retailers without a physical location in Colorado to report customers’ names and purchases to the government so it could collect use tax, The Wall Street Journal reports. 

• Last year, the Supreme Court undid a federal appeals court ruling that state laws regarding taxes had to be filed in state court, on the grounds that the challenge is not regarding tax collection per se, but “notice and reporting requirements” about people in other states. 

• Trade groups such as the Retail Industry Leaders Association praised the court's decision. "Main Street retailers welcome the decision announced today and look forward to a better opportunity to resolve this decades-old problem once and for all," RILA executive vice president and general counsel Deborah White said in a statement.

Dive Insight:

Retailers with a physical presence in a state have long been required to add state sales taxes to their online orders, but many states have mulled ways to include retailers that have no operations within their borders. 

The Supreme Court first heard a challenge to this Colorado e-commerce tax effort in 2014. Back then, it, and other sales tax initiatives like it, were referred to as an “Amazon tax,” because of the advantage that retailer enjoyed because customers weren’t generally subject to state sales taxes. That nickname has fallen away, though, as Amazon has increasingly added state sales taxes as it builds a network of fulfillment and distribution centers and even physical stores. In recent years, the e-commerce giant has gone so far as withdrawing its opposition to such proposals.

Meanwhile, several states (and even Congress, which so far has failed to get beyond the anti-tax sentiment among many of its members) are working to find ways to even the playing field for retailers with physical stores within their borders. If Colorado’s scheme ultimately passes muster, as it’s closer than ever to doing, it may provide one blueprint for doing so.

RILA hailed the Court's choice, saying its February decision holding that Colorado's statute properly bypasses earlier Court decisions that have stymied state efforts to collect sales taxes from online sales. Other such cases will provide better opportunities to tackle what the group says are outdated precedents that so far have allowed the customers of many online retailers to escape paying sales tax.

"It is unquestionably true that the Supreme Court's decisions in [precedents in the cases of] Quill and Bellas Hess have become anachronisms that should be addressed by the Court at the earliest possible opportunity. But this case was not the right case," White said.