Colorado – Colorado’s “Amazon Tax” Law Is Now In Effect. Here’s What It Means For Shoppers and Big Sellers

The Denver Post
by Brian Eason
July 7, 2017

It boils down to this: Deal with taxes as you go or face a bunch of paperwork (along with the taxes) later.

Seven years and one U.S. Supreme Court decision later, Colorado’s law aimed at prodding online retailers to collect sales taxes took effect this month.

Better known as the “Amazon tax” law, it actually doesn’t change a thing for the dot-com behemoth, because Amazon has been collecting sales taxes in the state since February 2016.

But it gave other large online retailers an uncomfortable choice: Start collecting sales taxes now, or pass that responsibility on, leaving their customers with a tax burden later.

Wait, so what is this law, and why was it created?

The law is designed to close a tax loophole created by the boom in online retail. In Quill v. North Dakota, the U.S. Supreme Court in 1992 ruled that customers do owe state sales taxes for online purchases, but states can’t force companies to collect it.

That’s been a boon to online shoppers, since states typically don’t prosecute residents for failing to file their own taxes on online goods. It’s also given online retailers a competitive advantage over businesses with a brick-and-mortar store in Colorado. And, it’s cut deeply into state and local government revenues. In 2012 — before Amazon started collecting sales taxes — Colorado was losing an estimated $350 million a year in taxes on online sales.

To fix it, the Colorado legislature came up with a workaround that’s become something of a national model: Force retailers that don’t collect sales taxes to file reports on how much their Colorado customers are spending and warn customers that they may owe taxes.

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