Amazon and Colorado go to war over new sales tax law
Consumers have long enjoyed the fact that they don’t need to pay sales tax on purchases they make on online stores so long as the company is based in another state than the one they live in. However, as state budgets continually spin out of control, that may all be changing in the not-so-distant future.
Colorado recently signed a bill into law that says retailers of a certain size must inform customers of how much tax they owe to the state, and at the end of the year tell them how much each customer owes. The reason for it being done in this way is that in 1992 the United States Supreme Court ruled that a retailer could not be forced to collect tax on sales made to a state where they did not operate. While some states have tried to force through making retailers such as Amazon collect the taxes directly, they all knew this would fail in court, this new method doesn’t have them collecting, but simply informing.
In retaliation for this new law, Amazon yesterday e-mailed all of its affiliate partners in the state, and told them that they were being thrown out of the program. While some states have tried to use affiliates as a means of saying online stores have a physical presence in the state, Colorado had specifically not gone this route as they were Amazon would toss its affiliates out. Amazon went ahead with this plan to try to show Colorado that all they were doing was hurting its own citizens.
According to CNET, this new law was led by state Democrats, and Republicans are now trying to get it repealed to help the associates that got kicked out by Amazon. Democratic Colorado Gov. Bill Ritter told the Denver Post, ”Amazon has taken a disappointing – and completely unjustified – step of ending its relationship with associates. While Amazon is blaming a new state law for its action, the fact is that Amazon is simply trying to avoid compliance with Colorado law and is unfairly punishing Colorado businesses in the process.”
There has been no indication of which side may give in first.
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March 10th, 2010
good way to kill job-creating business and commerce! Way to go Colorado morons!!