I wrote just a couple of days ago that it feels like an almost every day phenomenon that yet another state is introducing “Amazon Tax” legislation to broaden nexus net and thus e-commerce sales and use tax revenues.
Now Colorado is joining the list, perhaps motivated in part by its $1.6 billion budget shortfall.
H.B. 1193 (Concerning the Collection of Sales and Use Taxes on Sales Made by Out‐of‐State Retailers) was introduced to create a rebuttable presumption of nexus – as of March 1, 2010 – when, “any out-of-state retailer that has a referral relationship with an affiliate has an obligation to collect tax.”
And for use tax purposes, the bill provides that the DOR “may issue a subpoena to any out-of-state retailer if the out-of-state retailer refuses to voluntarily furnish specific information when requested and may take the out-of-state retailer’s testimony under oath,” under penalty of contempt for not submitting to such.
The threshold portion of this proposed Amazon Tax bill is $10,000 in sales generated by Colorado affiliates to recipients in Colorado during the preceding calendar year.
The ramifications are so strong – and potentially coming so soon – that Overstock.com has already sent a letter to its affiliates that it will “have to sever relationships with Colorado Affiliates before the bill becomes law,” as it did previously when similar legislation prompted it to do so in New York, Rhode Island, and North Carolina.
UPDATES: As of February 3, Sales Tax Buzz is reporting that H.B. 1193 has passed in Colorado’s House. And as of February 10, the bill passed in the State Senate, with certain amendments (see the “re-revised” version here). As of February 16, the bill is awaiting the Governor’s signature, as the House passed the amended version. LATEST UPDATE: The bill has been signed into law! It is effective as of March 1, 2010!
Check out this *excellent* discussion by Brian Strahle at Leverage SALT on the ramifications of this new law here.
MARCH 8, 2010 UPDATE: Amazon affiliates in CO awoke this morning to the news, in an email from Amazon, that Amazon has cancelled its affiliate program in Colorado. It reads:
Dear Colorado-based Amazon Associate:
We are writing from the Amazon Associates Program to inform you that the Colorado government recently enacted a law to impose sales tax regulations on online retailers. The regulations are burdensome and no other state has similar rules. The new regulations do not require online retailers to collect sales tax. Instead, they are clearly intended to increase the compliance burden to a point where online retailers will be induced to “voluntarily” collect Colorado sales tax — a course we won’t take.
We and many others strongly opposed this legislation, known as HB 10-1193, but it was enacted anyway. Regrettably, as a result of the new law, we have decided to stop advertising through Associates based in Colorado. We plan to continue to sell to Colorado residents, however, and will advertise through other channels, including through Associates based in other states.
There is a right way for Colorado to pursue its revenue goals, but this new law is a wrong way. As we repeatedly communicated to Colorado legislators, including those who sponsored and supported the new law, we are not opposed to collecting sales tax within a constitutionally-permissible system applied even-handedly. The US Supreme Court has defined what would be constitutional, and if Colorado would repeal the current law or follow the constitutional approach to collection, we would welcome the opportunity to reinstate Colorado-based Associates.
You may express your views of Colorado’s new law to members of the General Assembly and to Governor Ritter, who signed the bill.
Your Associates account has been closed as of March 8, 2010, and we will no longer pay advertising fees for customers you refer to Amazon.com after that date. Please be assured that all qualifying advertising fees earned prior to March 8, 2010, will be processed and paid in accordance with our regular payment schedule. Based on your account closure date of March 8, any final payments will be paid by May 31, 2010.
We have enjoyed working with you and other Colorado-based participants in the Amazon Associates Program, and wish you all the best in your future.
Best Regards,
The Amazon Associates Team
Filed under: E-Commerce, Legislation Tagged: | affiliates, Amazon Tax, Colorado, H.B. 1193, Internet sales tax, internet tax, nexus
Today Amazon canceled all Colorado affiliates, including me. I didn’t make any real cash off mine, so I’m not really harmed, but I was shocked. Not much discussion of this tax around the state that I’ve seen.
All the monkey-see-monkey-do states seeking to enact their own amazon tax bill, don’t they see amazon dropping the states that do this like hotcakes? Or are they too busy rubbing their greedy little hands together imagining all of the amazon tax dollars they THINK they will be collecting, but which they WON’T. Maybe someone should tell them to stop rubbing their hands together and start reading the results of amazon’s reactions to these implemented bills. Hope those states are proud that destroyed income revenue for their citizens. I think the word IDIOTS is appropriate here for the state law makers.
Agreed.
Colorado is always doing idiot things.
Thank you for all of your writing with diligence and intelligence. We’ll all miss you so much, Althea.
Actually this isn’t a new tax. It is simply a way for local business to get rid of unfair competition from out of state scoff laws.