Posted on 03/10/2010 3:26:01 AM PST by BulletBobCo
The political battle over taxing online sales made through retailers such as Amazon.com intensified Tuesday, with Democrats saying the state should not back down from trying to collect money it's owed and Republicans arguing the new law should be repealed.
The hardened stances came a day after Amazon said it would end its relationships with thousands of online affiliates in Colorado who send business its way through blogs and niche websites and then earn commissions on each sale.
Republicans immediately blamed the Democratic-controlled legislature for passing a bill that attempts to collect the state's 2.9 percent sales tax on online sales through e-retailers such as Amazon and Overstock.com.
"The Democrats' bill and their anti-Amazon rhetoric doesn't harm Amazon," said Sen. Greg Brophy, R-Wray. "It hurts the thousands of Colorado affiliates" who made money from online sales.
Democrats, though, said Amazon's action was purely a public-relations tactic, punishing affiliates even though the final version of the bill removed the in-state marketers as means of collecting the sales tax.
"They (Amazon) absolutely killed the affiliates just to show that they can," said Sen. Michael Johnston, D-Denver.
Meanwhile, one liberal group called for a boycott of Amazon until the retailer renews its relationships with affiliates.
Amazon "chose to make an example of our state and unfairly punish their own business associates for political gain," the group ProgressNow Colorado said in a release.
At the statehouse, both sides agree the fight with Amazon could have national implications. Colorado's approach in attempting to collect sales tax from online retailers who don't have a physical presence in the state is unique from any other state that has tried to collect the same tax.
Gov. Bill Ritter signed House Bill 1193 into law Feb. 24. The measure requires online retailers to send notices to Colorado buyers that they owe state tax on their purchases, and it would fine the retailers $5 per unsent invoice if they don't do it.
The hope is that retailers will find it less trouble to just collect the tax from purchasers and remit it to the state, something Amazon officials themselves recognize.
Amazon spokeswoman Mary Osako on Tuesday would not explain why the retailer had ended relationships with sellers in Colorado and instead repeated phrases from a letter the company sent to affiliates over the weekend.
"Although the legislation and regulations do not require online retailers to collect sales tax, they are clearly intended to increase the compliance burden to a point where online retailers will be induced to 'voluntarily' collect Colorado sales tax," she said in an e-mail that quoted directly from the statement to affiliates.
In the bill's original form, the tax would have been collected through the in-state affiliates, as other states are attempting, but Johnston and other lawmakers helped re-engineer the bill to take affiliates out of the equation after threats from Amazon that it would dump them.
When the bill was changed, Democrats, in-state affiliates and even Republicans cheered.
Brophy wrote on his Twitter account at the time that affiliates were "no longer collateral damage in war on Amazon" and said, "Affiliates win!"
On Tuesday, though, Brophy said he was wrong. "I thought that (the new version of the bill) settled the question, but it didn't."
Amazon has said that it will only renew its relationships with affiliates if the law is repealed or significantly altered.
Brophy said he is seeking permission from Democratic leaders to offer a late-status bill to repeal the legislation.
A state Department of Revenue official said online retailers will be hit with penalties if they don't comply with the new law by May 1.
"In other words, to avoid penalties, prior to May 1, a retailer that does not collect sales tax must begin including the notification that sales tax is due," said agency spokesman Mark Couch.
So...does Colorado expect us to pay tax on donations to say..Free Republic?
Repeal the law. Seems simple enough to me.
Anyone care to make a bet on which state capitol building is burned to the ground?
They should have stopped doing business in Florida years ago...
When someone from CO trys to order something online, the “store” should just say we don’t sell to CO due to their sales tax laws, sorry.
I am trying to understand what is going on here. How does this affect affiliates other than they tack onthe 2.9%?
Why would you move when I think it says all affiliates whether in state or out of state must collect from Colorado residents?
Just trying to understand.
Art I Sec 9:
No Tax or Duty shall be laid on Articles exported from any State.
Art I Sec 10:
No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing it’s inspection Laws; and the net Produce of all Duties and Imposts, laid by any State on Imports or Exports, shall be for the Use of the Treasury of the United States; and all such Laws shall be subject to the Revision and Controul of the Congress.
Not out-of-State affiliates but only those in the State. It’s unconstitutional for any state to collect sales taxes on such commerce from a business in another state. That’s why states like Colorado are trying to collect the taxes through some sort of physical presence in their states.
Also, the law presents an invasion of privacy, IMO, by forcing residents to send records of what they have purchased to a state office. ...not for lawsuits on that last point but certainly for bad public affairs for the politicians deservedly lacking revenues for their employees’ hoggish ways.
http://www.freerepublic.com/focus/f-news/2467800/posts
Sorry my bad, did not think it was so difficult but now understand better. It’s a nightmare to manage.
I prefer sales tax to Income tax. Here in Washington State we have a sales tax but no income tax.
How do you think States should compensate lost sales tax revenue? Not saying they should cut services such as Fire. Police etc. but without getting into a spending debate, I an wondering how local government gets funded as e-commerce forces then to take a hit?
I am sick to death of so many taxes and absolutely hate the income tax with every fiber of my being, but I can live with a reasonable sales tax because it is transparent and gives me a choice to avoid or not.
So I am just pondering what states and locals will do if their sales tax revenue streams decline and there’s nothing they can do about it. Hike property taxes? Hike local brick and mortar business taxes?
I wish there was the FairTax at both federal and state levels. And no property tax, no income tax, no capital gains tax, no business tax etc. But this is an issue of cross border tax engineering and it’s important how to make it simple, reasonable, fair and transparent.
I agree with everything you say but please see my post #12, think about it and please tell me what you think. Even if you don’t know what to think, it’s important to know your reaction. Thanks.
So....what about all those people who are going to have to wait to get their tax returns? This is even worse, because those tax returns are the peoples own money to begin with.
Starve this beast.
We can survive without their money, but they can't survive without ours.
90% of the taxes go to the enriching the bureaucracy and providing things citizens should be paying for themselves.
Education: If you have a kid pay for his education. Expecting someone else to pay is so un-American it makes my head explode. The whole education bureaucracy is completely unnecessary and useless, especially at the State and Federal level.
Medicare/Medicaid: People need to pay for their medical treatment. They've increased the demand dramatically with these idiotic programs and can't figure out why the costs have skyrocketed. Duh.
It goes on and on and on.
Government was designed to protect our unalienable rights.
How about they drop every other tax on businesses except for a sales tax? That would keep local vendors competitive and more than competitive.
Won’t happen, but it’s actually a revenue-neutral solution.
Also, why should an e-tailer in another state be required to pay for another state’s fire/police/idiot politicians when it will derive no benefit or service from said monies as they are not in that state?
I agree very much!
But I’ve asked some of the more visible proponents of the Fair Tax about abolishing property taxes while they’re at it. They won’t discuss it and said that they only want the sales tax while abolishing taxes on corporations.
So far, I’m through with helping any of the corporate-government-academic families with any political effort. They’re the problem.
If property taxes continue while corporate taxes are abolished, only the corporate-government-academic families will own real properties from then on. Everyone else would be evicted, because local governments (controlled by guess who, see above) would radically raise property taxes to put the peasants (the rest of us) out in order to beautify their housing developments (that is, “beautify” in the eyes of unhealthy NIMBYs and HOA queens).
So abolish property taxes exclusively first, and I’ll help with abolishing corporate taxes. Otherwise,...no-vote, and I’ll continue to advocate for self-sufficiency, until we see completely new leadership.
I agree but now we are getting into a spending debate.
I want to hear from you and others how local government can fund essentials such police, fire, courts, jails, etc.
I hate an income tax as well as property tax and business tax and IF sales tax takes a major hit with e-commerce expansion, then how to fund my local essential government services? That’s the question.
I am thinking tax engineering, how to design a fair, transparent, simple easy to manage tax system at the state/local level.
I am thinking outside the box such as endowed local tax bond issues that get a federal kickback if the local bond monies are attached to a US Treasury bond, so that state/locals get a reliable revenue stream for defined essential services only, and the federal kickback would be limited by the old Constitutional device of apportionment.
The above would segregate essential services from the tax revenue pools that leftist groups think they own for their waste and intrusion.
The more I think about my idea above the more I like it.
And by self-sufficiency, I mean avoiding all unnecessary personal purchases, growing our own food, producing our own energy, and each of us maintaining a hobby of manufacturing a useful necessity. ...until the default and subsequent completely new leadership (new families in business, politics and academia with no more inbreeding).
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