TaxOps

Colorado's Amazon Law Requires Out-of-state Retailers to Report Unconstitutional Sales

The U.S. District Court of Colorado has found the Colorado "Amazon" law requiring out-of state retailers to report information about customers' purchases to each customer and to the Colorado Department of Revenue (CDOR) to be in violation of the Commerce Clause of the United States Constitution (Direct Marketing Association vs. Huber). The State of Colorado requires retailers who sell $100,000 or more of products to customers in Colorado, and that do not collect and remit sales taxes on those products, to:
  • Notify the purchaser of obligation to self-report and pay use tax.
  • Provide customers who purchase more than $500 annually from the retailer with an annual report of purchases and inform customer the retailer is required to file an annual purchase summary reporting the customer's name and total purchases to the CDOR.
  • Provide the CDOR with an annual customer information report stating the name, billing and shipping address, and total purchases for each of its Colorado customers.

The Court found the law violates the "dormant Commerce Clause", which prohibits state actions that interfere with interstate commerce, because it discriminates against out-of-state retailers. The court further found the CDOR failed to prove the law advances a legitimate local purpose unable to be served by "reasonable nondiscriminatory alternatives," and places impermissible undue burdens on interstate commerce. The Court issued a permanent injunction to prevent the law from being enforced.

For questions about sales tax or other SALT issues, please contact Meredith Theiss at 720-227-0064 or mtheiss@taxops.com.