Mail Order Companies Claim Court Victory
CATALOG companies have won at least a temporary victory in their fight against having to collect sales taxes from out-of-state customers.
The US Supreme Court on Tuesday said it is up to Congress to decide whether to force companies such as L.L. Bean and Lands' End to collect sales taxes in states where they don't have offices, stores, or warehouses.
Analysts said retailers would lobby hard against such legislation, which would probably be unpopular with consumers.
"It was a positive ruling for direct marketers," said San Francisco securities analyst Marcia Aaron. "At least near-term it's in their favor. Long-term, who knows?"
Under a 1967 Supreme Court ruling, mail-order companies had to collect taxes from consumers only in states where they had a business presence.
The court said imposing tax collection obligations would violate retailers' due-process rights and obstruct interstate commerce.
On Tuesday, the high court reversed the due-process part of the 1967 ruling but said it is up to Congress to decide whether tax collecting would burden interstate commerce.