DENVER – Opponents of Colorado’s “Amazon tax” were back in court Friday to try to get a judge to block it again.
When the Legislature passed the law in 2010, it was a novel way to get around a long-standing Supreme Court case that banned states from collecting sales taxes from out-of-state sellers.
The Direct Marketing Association sued Colorado in federal court in 2010, and the federal judge blocked the law.
Colorado got a reprieve, though, when the appeals court decided federal courts don’t have jurisdiction. So, nearly four years later, the case is starting over again – this time in Denver District Court.
Internet sales make are a big part of commerce, and local retailers argue it’s unfair that their customers pay sales taxes while companies like Amazon.com can sell to Coloradans tax-free.
Many states have tried to find a way to tax Internet sales, but none has followed an approach exactly like Colorado.
Instead of taxing Internet sales, Colorado tells out-of-state retailers that they must notify their customers that they owe use tax – essentially the same thing as sales tax, but it’s paid by the customer directly to the state, instead of being collected by the seller.
Colorado’s law made it a burden for companies to communicate with customers and keep sales records for state inspection, but they can avoid the hassle if they decide to pay sales taxes.
Direct Marketing Association lawyer George Issacson argued that Colorado’s law discriminates against out-of-state retailers and is unconstitutional.
But Melanie Snyder of the Colorado Attorney General’s office argued the law is perfectly constitutional.
“You can treat people differently, and that doesn’t mean it’s discrimination,” Snyder said.
The plaintiffs are asking Denver District Judge Morris Hoffman to temporarily block the law while their lawsuit proceeds.
Hoffman did not say when he would rule on the request, but he wants to get a decision out soon.