Ginny Marvin says, “The decades-long effort to give states the power to collect sales tax on purchases made online from out-of-state retailers took another turn this week when the Supreme Court declined to hear a casechallenging a Colorado sales and use tax collection law. The decision not to hear the case opens up the potential for other states to follow Colorado’s creative lead in addressing tax collection on online sales.

The Colorado notify-and-report law requires that retailers without physical locations in the state notify residents about sales tax laws and send a year-end statement of purchases to residents. In addition, the law requires that retailers send a report to the state revenue service annually that includes customer names, addresses and purchase amounts annually. The law applies to retailers with at least $100,000 gross sales in the state and to residents who purchase at least $500 worth of goods or services with a retailer.

Currently, states require consumers to self-report use tax (sales tax paid by consumers) owed on purchases made from out-of-state retailers, but few actually do it. The Colorado law gives consumers a much clearer incentive to do so.

As e-commerce has grown as a percentage of overall sales, states have been looking for ways to collect taxes on all of those transactions”.

How a 2010 Colorado law suddenly stands to change internet sales tax collection for good

Marketing Land

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