Colorado's Internet Use Tax and the Future of Internet Taxation
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In the continued growth of the United States e-commerce industry, states have progressively devised mechanisms to attempt to force Internet retailers to collect sales tax. Colorado’s Internet use tax reporting requirements was the first reporting regime to use the threat of onerous reporting requirements, the imposition of penalties and the tracking of use tax reporting by in-state customers as a mechanism to incentivize (or force) Internet retailers to register to collect and remit Colorado sales tax. However, the enactment of this reporting regime has been met with legal challenges and the dissatisfaction of Colorado residents. In addition, other states have watched closely and have proposed similar legislation or have continued to enact “New York Style Amazon Laws” in an effort to expand their sales and use tax nexus standard. While federal legislation has been proposed which would largely resolve these issues, it has failed to gain the support needed for passage. Until then, it is likely we will see future legal challenges and possibly some guidance from the United States Supreme Court.
AuthorsMichele Borens, Sutherland Asbill & Brennan LLP
Overview of Colorado's Reporting Use Tax Reporting Requirements
- How They Began and Evolved Into the Current Form
- Who They Apply to and What Exactly Is Required
- Challenges to the Constitutionality of the Reporting Requirements and the Future of the Requirements in Light of Such Challenges and Recent Elections in Colorado
Reporting Requirement Trends
- What Other States Have Done in Light of Colorado's Enactment of Its Reporting Requirements
- Continued Enactment of 'New York Style Amazon Laws'
- Pending Legal Challenges
Future of Internet Taxation
- Federal Legislation
- Supreme Court Review of Nexus Standard
- Continued State Challenges