Supreme Court Declines to Review Colorado’s Internet Sales Tax Law

The US Supreme Court denied review of a case that leaves intact a Colorado law forcing retailers without a physical presence in the state to turn over customer purchase data to state tax officials. The court’s denial of Direct Marketing Association v. Brohl gives the green light for other states to impose laws mandating the collection of consumer purchase data from online retailers, making it more difficult for customers who buy products online to avoid state sales taxes. It may also presage an examination of a 1992 Supreme Court ruling in Quill v. North Dakota that prohibits states from ordering out-of-state retailers to directly collect sales tax from their customers.

A reconsideration of that decision has already been suggested thanks to a separate 2015 high court ruling in the same case, where the justices unanimously agreed that the Direct Market Association had the standing to sue. In that ruling, Justice Anthony Kennedy also wrote a concurring statement emphasizing that the court should take another look at its 1992 decision. Kennedy noted that the amount of forgone taxes resulting from the decision is now many orders of magnitude greater than in 1992, when Internet commerce was not yet viable. He urged the the court to reconsider the decision at the earliest opportunity.