Amazon.com, the world’s largest online retailer, retaliated today against the Colorado General Assembly and Gov. Bill Ritter for moving to collect taxes on sales over the Web. House Bill 1193, signed into law by Ritter last month, requires online retailers to inform Colorado residents how much they owe in sales taxes for purchases made via the internet. The bill would also require retailers to provide summary information to the state of people’s web-purchases.
Amazon’s retaliation came in the form of closing the accounts of all Colorado sales “associates,” which are people or businesses which advertise Amazon products, and make a commission on all sales that they personally generate. While associates in the state will have their accounts closed, Amazon gave no indication that it would curtail or otherwise end its retailing in Colorado.
An earlier version of HB 1193 had sought to force retailers like Amazon to collect taxes on Colorado sales if at least one in-state affiliate solicits on behalf of the retailer. Amazon does collect sales tax for a handful of states, according to www.techflash.com.
The news of Amazon’s retaliation appeared early today on the site of blogger O’Reilly Radar.
The Ritter administration issued a statement this afternoon denouncing Amazon’s move.
“Amazon has taken a disappointing–and completely unjustified–step of ending its relationship with associates,” Ritter said in the prepared statement. “While Amazon is blaming a new state law for its action, the fact is that Amazon is simply trying to avoid compliance with Colorado law and is unfairly punishing Colorado businesses in the process.”
An official with the state Department of Revenue said the Amazon action misses the point in light of the fact that the bill was amended to tax sales by online retailers irrespective of whether they have in-state affiliates.
“Even if they sever their association with the affiliates, they still have an obligation under the law that passed,” said spokesman Mark Couch.
Legislative Republicans, meanwhile, issued a told-ya-so after having unsuccessfully fought the legislation.
“Now that the ruling party has decided to go it alone and tax the Internet, young, tech savvy entrepreneurs have lost a great business opportunity in Colorado,” Assistant Senate Minority Leader Greg Brophy, R-Wray, said in a prepared statement. “We were afraid this would happen.”
The bill was one of 11 introduced in the 2010 legislative session to end, suspend or limit tax exemptions and credits on a range of economic activities. The aim is to raise revenue and help ease the state’s budget straits; HB 1193 is expected to raise $5 million a year for the state.
The state’s business community by and large has opposed HB 1193 and its companion measures, contending the bills will stymie the state’s economic recovery and make it harder for businesses to add jobs.