Online Retailers Win Big (for Now)

Justice Clarence Thomas’s opinion for the Court Tuesday in Direct Marketing Association v. Brohlgave online retailers a big victory – something that certainly wasn’t all that clear after the rocky time their counsel experienced at the oral argument. The case involves a question of paramount importance to online retailers, at least those whose business model depends on not charging sales taxes. Colorado has a statute that requires online retailers selling to Colorado customers to file a report each year advising Colorado tax authorities of the purchases local residents have made from that retailer. Collectively, the reports would facilitate the state’s collection of use taxes from local taxpayers for their online purchases; because the use taxes substitute directly for the sales taxes charged on retail purchases, effective enforcement would end the advantage online retailers have when they can sell tax free.