The debate over requiring online retailers to collect sales tax continues.  Here’s the latest update:

The Marketplace Fairness Act has passed the Senate but is still pending in the House of Representatives. If passed, it would be a federal law that would require online retailers to collect sales tax in all 50 states. Retailers who make less than a $1 million in revenue annually would be exempt.

For now, online retailers are only required to collect sales tax in the states where they have a physical presence.  Some states like New York and California have determined that a physical presence should include affiliates, so online retailers must collect sales tax if they have affiliates in the state. Many large retailers have affiliates in several states, so this has had a greater impact on them than smaller businesses. Some large retailers, like Amazon, have sued in order to get these laws overturned. Amazon lost the case against the state of New York and appealed to the US Supreme Court.  The Court declined to take the case.  Although they did not comment on why they declined, the speculation is that they are waiting to see if any federal legislation will be passed regarding this matter.  For now that remains to be seen, considering the Marketplace Fairness Act has been pending in the House of Representatives for several months.