The e-retailers were appealing a New York State Supreme Court ruling from March that upheld a 2008 New York law. That law makes it easier to require online retailers to collect taxes on orders placed by consumers in New York because it interprets more loosely the definition of what it means for e-retailers to have a physical presence... The New York law, however, says that if a retailer works with affiliate marketers—such as coupon sites and bloggers based in New York that post ads or refer traffic to an e-retailer’s site in exchange for a cut of any sale that results—the retailer has a physical presence in New York and must collect sales tax from New York consumers.
Several members of the U.S. Supreme Court, from both sides of the politcal aisle, have a preference for the U.S. Congress to come up with laws, rather than have laws created at the court level by judgements made on the bench. It's now up to the Congress to come up with a solution.
Indeed, Overstock.com admitted it may be seen as the court's preference for Congress to come up with a solution:
“We’re not surprised, but we are disappointed,” says Jonathan Johnson, executive vice chairman of Overstock. “I really think the Supreme Court non-decision today is an invitation for Congress to find a workable solution to the tax issue. The Marketplace Fairness Act isn’t it.”
USNews.com reports [usnews.com] that this will increase pressure on Congress to come up with a federal level solution.
This decision by the Supreme Court may lead companies and lobbying groups to turn up the pressure on Congress, where legislation is being considered that would clarify all states have the power to collect sales tax from online purchases. The legislation, entitled the Marketplace Fairness Act, passed the Senate in May but has since stalled in the House of Representatives.
If they are going to collect taxes, it needs to be uniform otherwise the bookkeeping will be a nightmare, especially for smaller online retailers. In some states, sales tax vary by county and I recall reading this would result in over 1,000 taxing variations.