Evan Schuman's StorefrontBacktalk

The Seattle judge ruled that Amazon doesn’t have to divulge exactly which books, DVDs and other products Amazon’s North Carolina customers bought, but it does have to cough up enough information to help North Carolina collect its taxes.

Which judge is right? As with the recent dueling decisions by judges ruling on the federal healthcare reform law, it won’t be settled until all appeals are exhausted. In the case of Internet sales taxes, the Seattle and Colorado judges are in two different appeals circuits; that means it will take a U.S. Supreme Court decision to settle the question—and that decision may be years away. In the meantime, E-tailers now face different rules on collecting sales-tax information in at least two different states. North Carolina, yes; Colorado, no. But that’s not the end of it.

That’s not the end of it. In New York, Amazon and Overstock.com filed a lawsuit challenging a state law that said any E-tailer with sales affiliates in the state had to collect sales taxes. That lawsuit was thrown out in 2009, putting New York in the collect-sales-tax column. (Amazon has been collecting sales tax from New York customers ever since that ruling, but it discontinued its affiliate programs in other states, such as North Carolina, Colorado and Rhode Island, that passed similar laws.)

But in November 2010, a New York state appeals court said the E-tailers’ lawsuit could go forward—even though that court also ruled that Amazon’s main argument, claiming that the law was unconstitutional under the U.S. Constitution’s Commerce Clause, was wrong. New York will still collect sales taxes from Amazon until that case goes to trial—again.

Meanwhile, other states are trying to get in on the action, with California, Hawaii, Illinois, Iowa, Maryland, New Mexico, Vermont and Virginia all trying to pass similar laws. Not identical laws, mind you; each state seems determined to tweak its proposal. That means the crazy-quilt of state sales-tax regulations for Internet selling will add even more uncertainty and confusion about when and how Internet retailers might have to collect sales taxes or information.

For an E-tailer the size of Amazon, which has been the biggest target of most of these laws, making the necessary adjustments to its E-Commerce systems has been just a matter of doing business. Amazon has offices and warehouses (what the tax laws refer to as “nexus”) in several states, so it’s stuck with collecting sales taxes there. Adding more states to that list will be a pain for customers, but it’s just a straightforward programming task from an IT point of view.

Chances are good that Amazon could now flip a switch for any state where a court decision goes against it and comply with whatever regulations it needs to in order to keep selling there.

For other E-tailers, though, the uncertainty about which way Internet sales taxes will go—and when—is a much bigger IT spending decision. And it doesn’t look like anything will become clearer any time soon.