U.S. court appeals says Colorado can enforce its Amazon tax law

By Staff Writer | Feb 23, 2016 04:03 AM EST

Amazon already announced that they will be charging sales tax to Colorado customers, beginning on February 1, 2016. But recently, the US court appeals decided to endorse a Colorado law designed to make it convenient for the state to collect sales taxes on out-of-state purchases over the Internet.

According to The Washington Post, a federal appeals court promoted a Colorado law that aims to make the buying of products online and collecting of taxes for the purchase easier for consumers. The ruling by the U.S. Court of Appeals for the 10th Circuit in Denver overturns a lower court decision to block the state from enforcing its Amazon tax law, which stands for its online retailer Amazon.com.

The court ruling is considered to be a success for states asking to strengthen and increase the revenue by making sure that the online consumers would pay their taxes for their online purchases. But then the Direct Marketing Association, which is a trade group that questioned the 2010 law, considers this to have a negative impact on them.

The Amazon tax law makes sure that retailers which do not collect sales taxes should always be reminded to report transactions to customers and state tax authorities. The law also seeks to encourage online shoppers, some unaware of their responsibilities when shopping online, to pay their taxes.

A submitted court papers by Colorado wrote that the failure to shell out the designated amount of tax will pay the fines of over $170 million of tax revenue in 2012. With that, the law experts claimed that the nationwide loss might also increase into $11 billion.

Yahoo! News reported that DMA claimed that the Amazon tax law violated the Commerce Clause of the U.S. Constitution. A federal district judge even agreed in 2012 that the 1992 Supreme Court decision banned the states from collecting taxes from retailers with out-of-state purchases.

However, in the recent ruling, Circuit Judge Scott Matheson stated that the 1992 court ruling applied narrowly to tax collections. The district judge was also wrong to extend its reach to reporting obligations. "Reporting requirements are designed to increase compliance with pre-existing tax obligations," Matheson wrote. He added, "DMA has not shown the Colorado law imposes a discriminatory economic burden on out-of-state vendors."

DMA's vice president of advocacy, Chris Oswald, also claimed that his group is still reassessing the court decision. A spokesperson for Colorado, Attorney General Cynthia Coffman, who found out means to defend the law, on the other hand, made no comment regarding the decision, as reported by Reuters.

Meanwhile, the 10th Circuit decision includes the states of Colorado, Kansas, New Mexico, Oklahoma, Utah, and Wyoming. Amazon is now allowed to make charges on purchases by the residents of Colorado.

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