A 2010 Colorado law that forced online vendors like Amazon to charge state sales tax has been officially revoked by a federal court. The law had been temporarily blocked since last year, but now a ruling by U.S District Judge Robert Blackburn permanently shut it down.
Blackburn wrote in his opinion on the case, “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 went on to call the law unconstitutional, and stated that it did “impose an undue burden on interstate commerce.” No word on whether the Colorado Department of Revenue would appeal the ruling in a higher court.
The “Amazon Law,” as it was called in Colorado, was passed in 2010, along with a slew of other Democratic-backed bills designed to eliminate various tax exemptions, credits and breaks for a number of industries, in an effort to raise over $100 million to balance the state budget. Republicans called these bills “The Dirty Dozen,” and Majority Leader Amy Stephens, R-Monument, attempted to repeal the Amazon Law, when the party took control of the House in 2011. Stephens’ bill passed the House with support from many of the Democrats who’d opted for the Amazon Law in the first place, but it eventually died in a Democratic-controlled Senate. Similar tax laws had been put into effect in several states, including Hawaii and California. Amazon in Texas once offered new jobs in exchange for state sales tax exemption.
Still, Stephens stated that Blackburn’s latest ruling vindicated Republicans – “We said this all along – We said this was an undue burden, and the court agreed with us.”
Courts have typically declared that web retailers, unlike their physical counterparts, did not have to collect the sales tax from customers themsleves. The Colorado “Amazon Law’s” angle was to encourage online businesses to collect sales tax by forcing companies that didn’t comply with a pile of paperwork. The former law forced the companies to notify customers in Colorado if they’d owed sales tax, log sales lists and totals, and then send them out to the customers and the state every year.
Blackburn ruled, “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.” This is no longer the case in the state of Colorado.