DMA Sues Colorado Over Internet Sales Tax Law

    July 1, 2010

The Direct Marketing Association (DMA) has filed a lawsuit in federal court against Colorado challenging the constitutionality of a new law that requires online retailers outside the state to collect sales tax information from customers and turn it over to the state’s Department of Revenue.

The DMA says the law constitutes an "unprecedented invasion of consumer privacy," and also unfairly discriminates against interstate commerce because the law is targeted at only out-of-state retailers.

Jerry-Cerasale-DMA "The new law and the regulations implementing it are an unconstitutional and blatant violation of Colorado consumers’ privacy," said Jerry Cerasale, Senior Vice President, Government Affairs, DMA.

"The law may have been passed in the hope of balancing the state budget through increased use tax reporting by Colorado residents, but it has serious adverse consequences for consumers and businesses."

The DMA suit says the law and regulations violate both the United States Constitution and the Colorado Constitution.

"Retailers that have no office, store, property, employees or other physical presence in Colorado are not obligated under Colorado law, and are protected by the commerce clause of the United States Constitution from being required to collect Colorado sales tax on retail sales to Colorado consumers," the lawsuit says.