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A federal judge rules Colorado’s online tax law unconstitutional
A Colorado law that required online retailers without a physical presence in the state to inform Colorado customers of their use tax obligations and also report that information to the state’s Department of Revenue has been ruled unconstitutional by a federal court judge.Full Article: http://www.internetretailer.com/2012/04/04/federal-judge-rules-colorados-online-tax-law-unconstitutional
The Colorado law, passed in 2010 but never enforced, required retailers with $100,000 or more in annual sales to Colorado residents to provide those consumers with a report of their past year’s purchases and notify them of their responsibility to pay use tax—essentially the equivalent of the state sales tax—on those purchases. The law also required the retailers to provide the state with an annual report listing the names, billing addresses, shipping addresses and the total amount of purchases for each of their Colorado customers.
In his ruling late last week, Judge Robert Blackburn, of the U.S. District Court for the district of Colorado, wrote that the Colorado law placed unique burdens on out-of-state retailers and were discriminatory. “The Act and the Regulations [of the Colorado law] directly regulate and discriminate against out-of-state retailers and, therefore, interstate commerce,” wrote Blackburn. His ruling cited a 1992 U.S. Supreme Court decision from which was born a requirement that states can’t tax online purchases from e-retailers that don’t have a physical presence in those states.