February 25, 2016 Practice Points

Colorado's "Amazon Tax" Upheld

The ruling (subject to further appeal) marks the beginning of additional state-by-state compliance obligations that will affect annual corporate compliance.

By Greg S. Hearing

In a recent opinion from the Tenth Circuit Court of Appeals, Colorado’s so-called Amazon tax was upheld in the latest chapter of a five-year legal battle. In 2010, Colorado enacted legislation imposing notice and reporting requirements on retailers that sold goods to Colorado residents without collecting sales tax. The Colorado legislation required retailers to provide notice to in-state customers of their obligation to remit use tax for items purchased over the Internet, and additionally required an annual report to the Colorado Department of Revenue. The Direct Marketing Association challenged the law in both state and federal court, which yielded prior opinions from the Tenth Circuit as well as the Colorado Supreme Court. Following those opinions, the district court and Tenth Circuit were confronted with the questions of whether the Colorado law violated the bounds of the Dormant Commerce Clause.

On February 22, 2016, the Tenth Circuit held that Colorado’s statutory scheme does not discriminate nor unduly burden interstate commerce. The ruling paves the way for Colorado, and other states, to impose notice and reporting requirements on out-of-state retailers selling goods within the state. For corporate counsel representing e-retailers, the ruling (subject to further appeal) marks the beginning of additional state-by-state compliance obligations that will affect annual corporate compliance.

— Greg S. Hearing, Gordon & Rees LLP, Denver, CO


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