In what may become the standard by which other state lawmakers around the country use themselves, Colorado has finally enacted a new law governing sales taxes on the purchase of items online that puts the onus for collecting tax revenue squarely on the shoulders of retailers and consumers.
The cornerstone of the new law requires online retailers that don’t currently collect online sales taxes to notify shoppers in Colorado that they are responsible for paying the taxes themselves directly to thestate. It also dictates that retailers doing more than $100k annually in online sales to Colorado consumers must provide the state’s Department of Revenue with a list of all their in-state customers and the total value of each of their purchases.
“Every online retailer who sells to a Colorado purchaser and doesn’t collect sales tax will be required to put a notice in the customer’s invoice that says, ‘You are obligated to pay sales tax in the state of Colorado for this purchase’,” said Mark Couch, liaison for the state’s Department of Revenue. The requirements regarding customer lists and their purchase history are designed to aid the state’s effort to check compliance with the law.
Though very few actually do so, consumers are already required to pay their own taxes for online purchases. Colorado’s law, the first of its kind nationwide, finally puts some muscle behind that requirement and could raise upwards of $4.7 million in revenue for the state in the first year alone.
Colorado governor Bill Ritter Jr. officially signed it into law on March 1.
Couch added that more than a few other states have already approached Colorado with interest in the new law and have plans to track its effectiveness to see if similar legislation is a good fit for them as well. Colorado has a budget deficit of several hundred million dollars, and like many states, is seeking every possible means of narrowing that fiscal gap.
Colorado’s law was initially proposed as a mirror to New York state’s “Amazon law”, (which we detailed in a past posting) that addressed the online sales tax issue terms of affiliate relationships between large and small outlets. But, as we argued for when discussing Virginia’s online sales tax legislation, Colorado lawmakers dropped language in their bill regarding affiliates due to concerns that major online retailers like Amazon, Overstock and the like would end their business relationships with Colorado companies.
Nevertheless, it probably won’t be long before other states follow Colorado’s lead and become more proactive in collecting online sales tax revenues.
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[...] 21, 2010 by ecommercejunkie Colorado’s recently-passed legislation requiring retailers to collect taxes on online purchases has turned the state into a battlefield [...]
[...] take long. Less than a week after the Colorado legislature targeted out-of-state retailers with a bill that imposes sales taxes on online purchases, the measure has already claimed its first victims and reignited a fierce political debate in the [...]
“It also dictates that retailers doing more than $100k annually in online sales to Colorado consumers must provide the state’s Department of Revenue with a list of all their in-state customers and the total value of each of their purchases.”
Why I do I suspect there will lawsuits over this? Seems a little intrusive on the part of the state.
Glad I don’t live in Colorado.