Supreme Court Ruling Could Impact Internet Tax Status

WASHINGTON — The Supreme Court handed down a unanimous decision Tuesday allowing a retail association to challenge in federal court a Colorado sales-tax law. The law requires out-of-state retailers to notify Colorado customers of their sales-tax liability and report related information to consumers and state authorities at the end of each year. The case, Direct Marketing Association v. Brohl, could have implications for how states collect information on Internet and other remote sales. The DMA, which has members that sell to consumers in Colorado via catalogues, print advertising, broadcast media and the Internet, but do not collect sales taxes, sued Barbara Brohl, executive director of the Colorado Department of Revenue, in federal district court in Denver in 2010, alleging the state’s notification and reporting law violated the Commerce Clause of the U.S. Constitution. The district court ruled in favor of DMA and issued an injunction against Colorado’s reporting and notification requirements for out-of-state retailers. But the Tenth Circuit Court of Appeals in Denver reversed the lower court ruling in 2013 and held that the federal court did not have jurisdiction over the state’s tax laws. The Supreme Court reversed the appeals court decision on Tuesday. “In an effort to improve the collection of sales and

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