Colorado Bill Would Strike Online Sales Reporting Rules

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By Tripp Baltz

Colorado lawmakers are about to introduce legislation killing the requirement that certain out-of-state retailers report information about consumers’ purchases to the state department of revenue.

The bill has been drafted and will be introduced this or next week, Steve DelBianco, executive director of NetChoice in Washington, D.C., told Bloomberg BNA March 7. He said the bill would remove what he called the “tattle-tale” provision of Colorado’s 2010 reporting and notice law imposed on out-of-state vendors that don’t collect and remit the state’s sales and use tax. The portions of the law that require covered retailers to give consumers’ notice of their obligation to pay the tax, as well as provide buyers with an annual report of their purchases, will remain, DelBianco said.

The bill also removes a requirement that affected retailers use First Class mail to send the report to consumers and replaces it with language providing for it to be sent via email, DelBianco said.

Colorado’s law, approved by the state General Assembly in 2010, was found constitutional by the U.S. Court of Appeals for the Tenth Circuit. In December, the U.S. Supreme Court refused to consider an appeal of the law mounted by the Data & Marketing Association ( Direct Mktg Ass’n v. Brohl, U.S., No. 16-267, 12/12/16 Brohl v. Direct Mktg Ass’n, U.S., No. 16-458, 12/12/16 ).

A handful of states have introduced similar bills this legislative session.

Alternative to Compelling Tax Collection

In a cross-appeal to the court, Colorado petitioned for the court to overturn its foundational nexus standard affirmed in Quill Corp. v. North Dakota504 U.S. 298 (1992), which said a state can’t require a seller to collect and remit sales and use taxes if the seller doesn’t have a physical presence in that state. In 2010, supporters of Colorado’s reporting and notice law said it was designed to be an alternative way to compel remote sellers to collect taxes.

Sponsors of the bill will include Sen. Chris Holbert (R), the Senate Majority Leader, and Rep. Jovan Melton (D), Amy Stephens, former Republican House Majority leader and now lobbyist for NetChoice, told Bloomberg BNA March 7.

DelBianco said removing the requirement that retailers report sales to the state is a “thoughtful” approach to amending Colorado’s law instead of a “scorched-earth” repeal.

To contact the reporter on this story: Tripp Baltz in Denver at abaltz@bna.com

To contact the editor responsible for this story: Ryan C. Tuck at rtuck@bna.com

For More Information

The Colorado General Assembly's web site is http://leg.colorado.gov/ .

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