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GOP Wants To Repeal Colorado Online Tax Law

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DENVER (AP) – Republican state lawmakers say a federal judge’s decision to block a Colorado law affecting larger out-of-state, online retailers shows it’s unconstitutional and should be repealed.

Judge Robert Blackburn ruled Wednesday that the law places an undue burden on out-of-state retailers and violates interstate commerce laws.

The law 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.

GOP House Majority Leader Amy Stephens said Thursday the law should be repealed. Democratic Sen. Rollie Heath said it only enforced a law already on the state’s books.

“That’s a huge ruling by the judge. He understands it violates the commerce clause and puts an undue burden on businesses outside Colorado. I think it would be prudent for us to reverse this law,” Stephens said.

Heath said all companies, including those doing business online, are required to pay state taxes and the law made it clear the rules will be enforced.

Democratic Senate Majority Leader John Morse said the law protects businesses in Colorado who already pay state taxes, but Stephens said the new law cost Colorado thousands of jobs.

Amazon.com Inc. cut ties last year with Colorado online businesses that help it sell products because of a new state law aimed at getting out-of-state, online retailers to collect sales tax.

Amazon.com and the Direct Marketing Association that filed the lawsuit did not return phone calls seeking comment.

The judge ruled that although the state has a legitimate interest protecting Colorado businesses, it still interferes with interstate commerce.

The move hurts businesses — many of them small, home-based operations — that earn money by using their Web sites and blogs to link customers to online retailers. Colorado has at least 4,200 such businesses, known as affiliates or associates, accounting for about 5,000 jobs, and most of them rely on Amazon to some degree, according to their trade group, the Performance Marketing Association.

Amazon said the new sales tax regulations were burdensome and unlike rules in any other state.

The company previously cut off affiliates in two other states that passed online sales tax laws, Rhode Island and North Carolina. Those states said online retailers had a presence there through affiliates and therefore had to pay sales tax.

In 2008, New York became the first state to treat local affiliates as enough of state presence to require retailers to collect sales taxes.

In 2007, federal prosecutors in Wisconsin withdrew a subpoena seeking the identities of thousands of people who bought used books through Amazon in a tax-evasion case after a judge ruled that customers have a right to keep their reading habits from the government.

by Steven K. Paulson, AP Writer (Copyright 2011 by The Associated Press. All Rights Reserved.)

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