Repealing the so-called “Amazon tax” from last year’s legislative session could be among the first priorities of the new General Assembly in January because of two important changes from last year: power in the House of Representatives has shifted to Republicans, and a recent court ruling in Washington could portend good fortune for a similar lawsuit filed against the collection of Internet sales taxes here in Colorado. Critics of the measure dubbed House Bill 10-1193 the “Amazon tax” because Amazon.com is one of the chief retailers that would be affected by the new regulations.
The legislation that passed in 2010 lifted the long-standing sales-tax exemption on Internet purchases in which the retailer is outside Colorado. While retailers cannot be forced to collect sales tax on behalf of a state in which they do not have a physical presence, the Colorado law seeks to compel retailers of a certain size to provide the Department of Revenue with a yearly report on the total amount of an individual’s purchases on which sales tax was not collected.
A recent federal court ruling in Washington said collecting a customer’s purchase information, and delivering that information to a government agency, violates a customer’s privacy rights. The court ruling even prompted the Denver Post, during a busy election season, to use a portion of its editorial pages to argue for repeal of the tax, saying, “…until Congress finds a national solution to the problem, we worry Colorado’s attempt likely will lead to lengthy court battles and headaches for taxpayers.” While Amazon.com filed the suit against North Carolina, the Direct Marketing Association (DMA) has filed suit against Colorado’s Department of Revenue.
Even before the GOP took control of the Colorado house in Tuesday’s General Election, Rep. Amy Stephens, R-Monument, announced plans to introduce legislation to repeal the exemption. She offered an olive branch to Gov.-elect John Hickenlooper, however.
“There’s a chance to reach a compromise,” Stephens said. “Like us, we believe the new governor cares about jobs. We will work with the governor and his staff to reach a compromise. I don’t think anyone thinks we’ve gained anything from this Amazon tax.”
Jerry Cerasale of the Direct Marketing Association, said the court win by Amazon didn’t guarantee a win by the DMA against the Colorado Department of Revenue.
“The North Carolina lawsuit has helped us, but there are a lot of differences (between the two cases), and you never know how a court is going to go,” Cerasale said. The DMA has also filed an injunction hoping to stop Colorado from implementing the first parts of the tax until the full lawsuit is heard. Cerasale said he’s hopeful the ruling on the injunction will come before the end of January.
Sen. Rollie Heath, D-Boulder, Senate sponsor of last spring’s legislation imposing the Amazon tax, emphasized he was not speaking on behalf of his caucus, but said the North Carolina court ruling may actually help Colorado keep the tax in place.
“North Carolina goes into, ‘Did you buy books, did you buy CD’s, whatever you bought.’ All we ask, in this case, for Amazon to provide (to the state) is that Rollie Heath’s family purchased $500 from Amazon last year.”
When the 2010 General Assembly originally passed the legislation, Amazon.com created a public relations storm when the company reacted by closing all “associate” accounts in Colorado. Associate accounts allow individuals to partner with Amazon.com and profit from sales that the individual creates in tandem with the retailing giant.