The U.S. Supreme Court will hear a case over a Colorado Internet tax law. That law is about reporting requirements.

But the really interesting thing was a comment by Justice Anthony Kennedy, often a swing vote in big cases. He questioned the federal court precedent that bans states from collecting taxes from companies that don’t have a physical presence in a state.


“There is a powerful case to be made that a retailer doing extensive business within a state has a sufficiently substantial nexus to justify imposing some minor tax-collection duty, even if that business is done through mail or Internet,” Kennedy said.

Kennedy noted the “startling revenue shortfall” in many states from losing millions of dollars in taxes on Internet sales and the “unfairness to local retailers and their customers who do pay taxes at the register.”

City, county and state officials nationwide utter a cheer. As do retailers — those still in business — that have seen business migrate to the web, aided by lower tax rates on the Internet shippers.