5 ms·

Federal court tosses Colorado's Amazon tax

38 points by taylorbuley 15y ago

kposehn 15y ago
Woot. I'm pretty sure this will finally push many of the other Affiliate Tax laws off the books as well. /dancesajig
- _delirium 15y ago
  In states where Amazon has no presence, probably (if other courts agree), but with some of the states going after Amazon, like Texas and California, the status is murkier, because Amazon has a physical presence there, but via subsidiaries, which it argues don't count, but the states argue do count. They seem to be settling those cases and conceding the point, though; they've agreed to start charging sales taxes in Virginia and California next year, and Indiana, South Carolina, and Texas sometime in the next two years.
  - forrestthewoods 15y ago
    Would it make sense to charge sales tax on sales done through affiliates but not the rest of Amazon? Or maybe it's already done that way?
- chris11 15y ago
  Hopefully Amazon allows Colorado affiliates again.
- camz 15y ago
  realistically thats never going to happen. sales tax law is broken because they're not accounting for internet retail companies and its because its a recent phenomena and the law has yet to adapt from the old school brick and mortar/catalog system. things are changing and they're not going back.
blahedo 15y ago
> "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," Blackburn ruled." This is such bullshit. Not charging sales tax on items bought out-of-state will, by definition, discriminate against the in-state retailers by making their prices significantly higher.
- binarycrusader 15y ago
  I'm sorry, but the whole tax system is broken anyway. Online retailers (excluding the shell games that some companies play) do not benefit from a state's services, so why should they bear the burden of collecting taxes for that state? Most states have a use tax that is the responsibility of the taxpayer to pay to make up for this; I should know, I just filed my taxes and paid it.
  - enjo 15y ago
    They benefit because the people paying them money have the infrastructure to get to work to make the money to pay them. Everything is always connected.
    - waterlesscloud 15y ago
      The taxes are owed by the citizen/purchaser regardless. If the citizens are choosing to not pay it, how is that the retailer's issue?
      - jacobolus 15y ago
        Because in practice those taxes can’t be collected from consumers. Which means that Amazon gets a big unfair advantage vs. local stores. It’s stupid to have a reverse-tariff only charged to local businesses, because purchases from out of state send profits away, harming the state economy. Ultimately, states should probably scrap sales taxes and raise capital gains, inheritance, property, and income taxes to compensate. Those are all tough politically/legislatively though.
camz 15y ago
I've read the actual caselaw and determined that Judge Blackburn made the correct legal decision according the facts of the case. That doesn't mean that conclusion that "Sales Tax in Colorado shouldn't be collected." It merely means that the Judge made the right call because the law or legal statute was written by an idiot. It's significantly different from NYS' Amazon law that it takes an indefensible position. Sales tax under Quill v North Dakota has always stated that SALES TAX specifically and not income/franchise tax has a physical presence requirement. Colorado was stupid because they specifically call out non-resident/companies without a physical presence to comply with a series of demands (reporting, notices and etc) that cost crap tons of money. There's an obvious undue hardship here. The interesting thing is that NYS' position was much smarter they used the affiliate nexus rules. Instead of going after Amazon directly, they simply stated that Amazon had a physical presence in NYS due to the affiliate marketers in the state. The number of affiliates substantiates a "nexus or connection" within the state to require sales tax. This absolutely works! Don't get your panties in a bunch because this aint over by a long shot. Whoever wrote the law should be shot because any tax professional worth their salt should've seen this coming. This is coming from a guy that specialized in State and Local Tax at KPMG and defended audits on behalf of Goldman Sachs and etc. I recently had my opinion drafted by Tax Analysts (Tax.com) incase you're wondering about my background. I'm going to do a full and detailed writeup on my site later tonight
- fpgeek 15y ago
  Indeed. I expected to see an article about "affiliate nexuses" being thrown out. IMO, that would have been a huge deal. Now that I understand the details of this case, I am underwhelmed.

38 points by taylorbuley 15y ago

kposehn 15y ago

Woot. I'm pretty sure this will finally push many of the other Affiliate Tax laws off the books as well. /dancesajig

_delirium 15y ago
In states where Amazon has no presence, probably (if other courts agree), but with some of the states going after Amazon, like Texas and California, the status is murkier, because Amazon has a physical presence there, but via subsidiaries, which it argues don't count, but the states argue do count. They seem to be settling those cases and conceding the point, though; they've agreed to start charging sales taxes in Virginia and California next year, and Indiana, South Carolina, and Texas sometime in the next two years.
- forrestthewoods 15y ago
  Would it make sense to charge sales tax on sales done through affiliates but not the rest of Amazon? Or maybe it's already done that way?
chris11 15y ago
Hopefully Amazon allows Colorado affiliates again.
camz 15y ago
realistically thats never going to happen. sales tax law is broken because they're not accounting for internet retail companies and its because its a recent phenomena and the law has yet to adapt from the old school brick and mortar/catalog system. things are changing and they're not going back.

blahedo 15y ago

> "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," Blackburn ruled." This is such bullshit. Not charging sales tax on items bought out-of-state will, by definition, discriminate against the in-state retailers by making their prices significantly higher.

binarycrusader 15y ago
I'm sorry, but the whole tax system is broken anyway. Online retailers (excluding the shell games that some companies play) do not benefit from a state's services, so why should they bear the burden of collecting taxes for that state? Most states have a use tax that is the responsibility of the taxpayer to pay to make up for this; I should know, I just filed my taxes and paid it.
- enjo 15y ago
  They benefit because the people paying them money have the infrastructure to get to work to make the money to pay them. Everything is always connected.
  - waterlesscloud 15y ago
    The taxes are owed by the citizen/purchaser regardless. If the citizens are choosing to not pay it, how is that the retailer's issue?
    - jacobolus 15y ago
      Because in practice those taxes can’t be collected from consumers. Which means that Amazon gets a big unfair advantage vs. local stores. It’s stupid to have a reverse-tariff only charged to local businesses, because purchases from out of state send profits away, harming the state economy. Ultimately, states should probably scrap sales taxes and raise capital gains, inheritance, property, and income taxes to compensate. Those are all tough politically/legislatively though.

camz 15y ago

I've read the actual caselaw and determined that Judge Blackburn made the correct legal decision according the facts of the case. That doesn't mean that conclusion that "Sales Tax in Colorado shouldn't be collected." It merely means that the Judge made the right call because the law or legal statute was written by an idiot. It's significantly different from NYS' Amazon law that it takes an indefensible position. Sales tax under Quill v North Dakota has always stated that SALES TAX specifically and not income/franchise tax has a physical presence requirement. Colorado was stupid because they specifically call out non-resident/companies without a physical presence to comply with a series of demands (reporting, notices and etc) that cost crap tons of money. There's an obvious undue hardship here. The interesting thing is that NYS' position was much smarter they used the affiliate nexus rules. Instead of going after Amazon directly, they simply stated that Amazon had a physical presence in NYS due to the affiliate marketers in the state. The number of affiliates substantiates a "nexus or connection" within the state to require sales tax. This absolutely works! Don't get your panties in a bunch because this aint over by a long shot. Whoever wrote the law should be shot because any tax professional worth their salt should've seen this coming. This is coming from a guy that specialized in State and Local Tax at KPMG and defended audits on behalf of Goldman Sachs and etc. I recently had my opinion drafted by Tax Analysts (Tax.com) incase you're wondering about my background. I'm going to do a full and detailed writeup on my site later tonight

fpgeek 15y ago
Indeed. I expected to see an article about "affiliate nexuses" being thrown out. IMO, that would have been a huge deal. Now that I understand the details of this case, I am underwhelmed.