With practically no guidance being provided by Congress, courts have been trying cases regarding the application of sales tax to online retailers like Amazon.com, Inc. Unfortunately, not all state rulings have been consistent.

One state court ruled that Amazon and other online retailers would not be forced to comply with a newly passed state law requiring the collection of taxes on online purchases. The high court of another state, however, ruled that these businesses could be compelled to pay taxes concerning these sales. Amazon and Overstock.com, Inc. have appealed this second ruling to the United States Supreme Court.

According to a 1992 Supreme Court ruling, retailers did not have to remit taxes to states where the business had no physical presence. Yet the practice of not taxing companies that have an online presence in the states arguably could provide online retailers an advantage over other companies with a physical presence in that state.

It may be because of such a perceived advantage that states have implemented legislation that would allow for the collecting of taxes from online retailers. California is one of 13 states that currently require companies to collect sales taxes on online purchases; Amazon has been fighting a number of battles over sales taxes in these states for years.

Experienced tax attorneys will continue to represent clients bogged down in tax litigation matters. Especially in light of contradictory rulings, these attorneys understand precisely how complex these sorts of disputes can be. Tax attorneys are required to understand federal and state income and sale tax regulations, and also will need to understand the public policy considerations as to why certain laws have been put in place.

Source: Reuters, “State’ online ‘Amazon tax’ fight may land in U.S. Supreme Court: lawyers,” Patrick Temple-West, Oct. 21, 2013