Colorado Sales and Use Tax Reporting Requirement for Out-of-State Retailers Struck Down By Colorado Judge

A federal judge in Colorado struck down March 30 as unconstitutional a reporting requirement imposed on out-of-state vendors that do not collect and remit state sales and use taxes (Direct Marketing Association v. Huber, D. Colo., No.1:10-CV-01546-REB-CBS, order 3/30/12).

Judge Robert E. Blackburn of the U.S. District Court for the District of Colorado said that Colorado's 2010 “Amazon” law, so called for one of the online retailers it ostensibly targets, violated the Commerce Clause of the U.S. Constitution.

The law, approved by the 2010 Colorado General Assembly (H.B. 1193), requires out-of-state vendors that do not collect state sales and use taxes to notify consumers they may have an obligation to pay taxes on remote purchases. The law also requires the vendors to report certain information about such transactions to the Colorado Department of Revenue.

Blackburn's ruling enjoins the enforcement of the act and related regulations against retailers that sell to Colorado customers but do not have a physical presence in the state.

His ruling came on cross motions for summary judgment filed by the Direct Marketing Association, the plaintiff in the case, and the Colorado Department of Revenue, the defendant.