Colorado House advances repeal of online sales tax
May 5, 2011
DENVER (AP) – The Colorado House on Wednesday moved forward on a proposal that eliminates a law to collect sales taxes from out-of-state online retailers, a measure that drew the ire of Republicans last year and prompted a federal judge to block it.
The measure passed on a voice vote Wednesday and still needs one more vote before it goes to the Senate.
House Bill 1318 would repeal a law signed by former Democratic Gov. Bill Ritter last year. It requires retailers who don’t collect state sales tax to send their customers an annual notice of how much tax the customers should pay Colorado. It also requires retailers to provide the state with a list of customers.
A federal judge issued a preliminary injunction against the law in response to a lawsuit in January. The ruling said the law placed an undue burden on out-of-state businesses and that it raised questions about interstate commerce laws.
Lawmakers supporting the bill Wednesday said the law makes Colorado an unattractive place for online retailers.
The move to repeal the law, sponsored by Rep. Amy Stephens, the Republican House leader, has gotten support from Democrats this year.
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“It’s as though we have a firewall protecting us from commerce in a sense,” said Democratic Rep. Roger Wilson. “I’m going to urge support for this bill and take down that firewall and allow Colorado to become Internet friendly again.”
Amazon.com Inc. cut ties with Colorado online businesses that help it sell products because of the law. The company said Colorado’s new sales tax rules were burdensome and incompatible with what other states require.
Democratic Rep. Daniel Kagan said the judge’s ruling doesn’t mean the case is settled. He said if the judge had ruled the law violated interstate commerce laws, “it would’ve been a permanent injunction and that would’ve been the end of the matter,” he said.
“The court has simply put things on hold,” Kagan said.