Academic journal article Journal of Accountancy

Tenth Circuit Resurrects Colorado's Amazon Law

Academic journal article Journal of Accountancy

Tenth Circuit Resurrects Colorado's Amazon Law

Article excerpt

The Tenth Circuit Court of Appeals recently dismissed a lower court's permanent injunction that had enjoined Colorado from enforcing its Amazon law requiring remote sellers to report sales in the state. The Tenth Circuit held that the Tax Injunction Act (TIA) precludes federal jurisdiction over the claim that Colorado's law requiring out-of-state retailers to report information about customers' purchases to each customer and to the Colorado Department of Revenue (DOR) violates the Commerce Clause of the U.S. Constitution (Direct Marketing Ass'n v. Brohl, No. 12-1175 (10th Cir. 8/20/13)).

As a result, the Tenth Circuit remanded the case to the district court to dismiss the Commerce Clause claims and lift the permanent injunction the lower court had imposed prohibiting the DOR from enforcing the law (Direct Marketing Ass'n v. Huber, No. l:I0-CV01546-REB-CBS (D. Colo. 3/30/12)). Any further proceedings in the case must begin in Colorado's courts or administrative agencies.

BACKGROUND

The Colorado law (Colo. Rev. Star. [section]39-21112(3.5)) and related regulations require any retailer that sells $100,000 or more of products to customers in Colorado, but does not collect and remit sales taxes on those products, to:

* Notify the purchaser that the retailer does not collect Colorado sales tax and that the purchaser is therefore obligated to self-report and pay use tax.

* Send each customer who purchases more than $500/year of products from the retailer an annual report of the prior calendar year's purchases and inform the customer that the retailer is required to file an annual purchase summary reporting the customer's name and total purchases to the DOR.

* Provide the DOR with an annual customer information report stating the name, billing and shipping address, and total purchases for each of its Colorado customers.

Retailers can avoid the reporting requirements by voluntarily collecting tax from customers in Colorado. …

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