In 2010, Colorado enacted a first-of-its-kind law requiring out-of-state retailers that do not collect Colorado sales tax to do the following:
Because the state purported to impose these requirements on retailers with no physical presence in the state, a dormant Commerce Clause challenge was soon brought aginst the law in the case of Direct Marketing Association v. Brohl. That case was settled earlier this year with the parties agreeing that Colorado would begin enforcing its reporting and notification law on July 1 and not impose penalties for sellers’ previous noncompliance.
Colorado has adopted emergency regulations providing further detail on these requirements and creating a de minimis exception for sellers making less than $100,000 in gross sales into the state.
Louisiana, Vermont, and Washington all recently followed in Colorado’s footsteps. These states enacted new notice and reporting requirements, similar to Colorado’s, which became effective on July 1 (Louisina and Vermont) and July 7 (Washington). While three other states—Kentucky, Oklahoma, and South Dakota—require that non-collecting retailers notify their customers of their use tax payment obligations, only Colorado, Louisiana, Vermont, and Washington require that non-collecting retailers report information on their customers to the state.
As fellow blogger Emilie Burnette recently pointed out, these reporting requirements may raise consumer privacy concerns. In any case, it seems likely that at least some customers will not appreciate having their tax-free online purchases followed by a use tax bill from their state’s department of revenue. It may be that some customers will respond by taking their business elsewhere. Nonetheless, at least some major retailers have announced that they will comply with Colorado’s law by reporting their customers’ purchases rather than collecting and remitting tax.
From a customer relations standpoint, are retailers better off collecting and remitting tax or instead reporting their customers to the state? Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn.
Get a free trial to Bloomberg BNA Tax & Accounting’s State Tax solution, a comprehensive research service that provides deep analysis and time-saving practice tools to help practitioners make well-informed decisions.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)