A federal court has thrown out a 2010 Colorado law meant to spur online retailers like Amazon to collect state sales tax.
The law had already been temporarily blocked in federal court last year, but U.S. District Judge Robert Blackburn’s ruling Friday permanently handcuffs it.
“I conclude that the veil provided by the words of the act and the regulations is too thin to support the conclusion that the act and the regulations regulate in-state and out-of-state retailers even-handedly,” Blackburn wrote in his opinion.
The law and the rules to carry it out “impose an undue burden on interstate commerce” and are unconstitutional, the judge wrote.
Officials with Colorado Department of Revenue could not be reached immediately for comment on whether the state would appeal the ruling to a higher court.
The law was passed in 2010 as part of a package of Democratic-backed bills eliminating a number of tax exemptions, credits and breaks for a variety of industries to raise more than $100 million to help balance the state budget. Republicans called the bills the “Dirty Dozen,” and in 2011 when they took control of the House, Majority Leader Amy Stephens, R-Monument, attempted to repeal the “Amazon tax” law.
Stephens’ bill passed the House with support from many of the same Democrats who’d voted for the law the year before, and they pointed to the temporary injunction against it in federal court. But the bill died in the Democratic-led Senate.
Stephens said Blackburn’s latest ruling vindicated Republicans.
“We said this all along,” she said. “We said this was an undue burden, and the court agreed with us.”
Online purchases have always been subject to state sales tax, but courts have always held held that Internet retailers, unlike their brick-and- mortar counterparts, did not have to collect the tax from customers. The 2010 law was aimed at encouraging online retailers to simply collect the sales tax themselves by making companies that didn’t collect the tax comply with a host of paperwork requirements.
The companies had to notify Colorado customers in writing that they owed sales tax, keep a list of the total amounts purchased by Colorado customers and then give those to customers and the state every year.
“Enforcing a reporting requirement on out-of-state retailers will, by definition, discriminate against the out-of-state retailers by imposing unique burdens on those retailers,” Blackburn ruled.
Tim Hoover: 303-954-1626 or thoover@denverpost.com
