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Could a Colorado tax case raise fees for online shopping?

The US Supreme Court rejected a case Monday that could encourage more states to collect sales taxes from online purchases.

By David Iaconangelo, Staff

The US Supreme Court let stand on Monday a Colorado law with implications for internet retailers 鈥 and shoppers looking for a bargain online.

The law, a variation on what has been dubbed the 鈥淎mazon tax,鈥 requires online retailers to notify customers in Colorado how much they owe in sales taxes to the state, and report their purchases 鈥 or collect the state鈥檚 sales tax directly from those customers.

The Court鈥檚 refusal to hear a challenge to the law 鈥 while not endorsing it either 鈥 could embolden proponents of state-level efforts to collect state sales taxes from online shoppers. At least three other states, including Louisiana, Oklahoma, and Vermont, could see similar tax laws take effect.

Max Behlke, director of tax and budget policy at the National Conference of State Legislatures, told The Denver Post after the ruling that it could invite more state-level changes to online tax policies, which make up a significant part of many states鈥 budgets.

鈥淥ther states, which have seen their revenue decline in sales tax, would be more apt to introduce and enact legislation like Colorado鈥檚 (law),鈥 Mr. Behlke told the paper.聽

The Data & Marketing Association, which had challenged Colorado鈥檚 law after it was passed in 2010, made a similar prediction in expressing its frustration with the ruling.

鈥淲e are disappointed the Supreme Court did not take the case and are concerned it will only encourage other states to adopt similar laws and regulations that are designed to put arbitrary burdens on out-of-state sellers,鈥 the group said in a statement.聽

As rules that require online shoppers to pay state sales tax on purchases generally go ignored, state governments have long tried to model legislation that would allow them to capture tax dollars from their residents when they purchase from retailers without brick-and-mortar operations in the state. In Colorado, state officials estimate that it could be missing out on some $172.7 million in revenues per year.

Such laws get their nickname from Amazon鈥檚 own countering of such efforts, as the Associated Press wrote in 2015, when a South Carolina sales-tax break granted to Amazon expired:

George Isaacson, a constitutional law professor at Bowdoin聽College who represented the Data & Marketing Association in the Colorado case, told the Associated Press that the Court may wait for other states to copy Colorado before ruling definitively.

"Colorado was the first state to pass such a law, and the Supreme Court may be waiting to see how other state legislatures and lower courts deal with this type of highly controversial state legislation before addressing the constitutional issues," Mr. Isaacson told the AP in a statement.聽

This聽report聽contains material from the Associated Press.