A federal judge in Colorado has ruled that the state’s new regulations for online retailers are unconstitutional because they “impose an undue burden on interstate commerce.” The ruling came after Judge Blackburn temporarily blocked the implementation of the new set of rules in late January.
Unlike typical “Amazon taxes,” the law did not actually require out-of-state online retailers to collect the sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. . Instead, the law required online retailers that opt not collect the sales taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. to comply with a host of reporting and record keeping requirements. As we noted in January, “It’s a regulatory scheme so complicated and burdensome that its purpose is to force Amazon to just collect the tax itself.”
The judge argued that “Enforcing a reporting requirement on out-of-state retailers will, by definition, discriminate against the out-of-state retailers by imposing unique burdens on those retailers.”
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