TOP NEWS: CYBER TAX WARS & MA DATA SECURITY LAW

NEW COLORADO LAW NOT AN “AMAZON TAX”

BUT STILL BAD NEWS

New York, Rhode Island and North Carolina have passed what is known as an “Amazon tax” in which payments to in-state affiliates can lead to a requirement to collect sales taxes.  Colorado went down that path, but stripped this provision late in the process.  The presence of in-state affiliates does not trigger sales tax liability in Colorado.

So why did Amazon terminate its affiliates?  In its letter to Colorado affiliates Amazon stressed that the new law is “clearly intended to increase the compliance burden to a point where online retailers will be induced to ‘voluntarily’ collect Colorado sales tax”.  The new law requires out of state retailers to notify Colorado residents of their obligation to pay sales tax, mail a tax statement to each in-state purchaser every January and report to the Colorado Department of Revenue on total purchases made by each in-state customer.  While the law imposes substantial burdens on interstate commerce, there is no word yet of any court action to challenge.

As shown below the Amazon tax is pending in several states, including California where the Senate included it in its budget plan setting up a showdown with Gov. Schwarzenegger who vetoed the provision last year.  The question arises, however, if states keep passing this provision at what point would it be uneconomical for Amazon or other retailers to terminate in-state affiliates.

More Info:  Amazon kills affiliate program in Colorado thanks to taxes,  Ars Technica

Legal Input on Amazon’s Surprising Action in Colorado, Performance Marketing Association

Text of Colorado Law

Sequel in Sacto: Cal Senate Passes Amazon Tax, ILC Cyber Report

Status of "Amazon Tax" Legislation

A TAX WIN IN TINSELTOWN

After luring internet companies to Los Angeles with a special tax rate, last year the city reclassified a number of internet companies as “professional services” increasing their taxes by 500%.  Shopzilla.com and other companies threatened to leave the city if the prior tax rate was not restored.  Shopzilla’s general counsel, Blythe Holden led the fight against the change and won a major victory when the City Council voted unanimously to restore the lower tax rate.

More info:  Council Approves Modified Internet Business Tax, LA Business Journal