Colorado is requiring out-of-state retailers to track and report sales. Retailers are required to send consumers an annual report to assist in their use tax preparation. Retailers are also required to submit a copy of these reports to the Colorado Department of Revenue.
The Supreme Court has ruled that the collection of sales tax by out-of-state businesses would unduly burden interstate commerce. They will eventually have to decide if reporting requirements are similarly burdensome. On one hand, simply reporting sales is much less burdensome than keeping up with all the different state, county and municipal tax rates and rules. On the other, sending out a report to every customer at the end of the year could represent a significant burden.
In March, Amazon terminated their relationship with all of their Colorado affiliates as they did in New York. A notable difference between the Colorado law and New York’s is that the latter was using affiliates within the state borders to establish nexus. Amazon’s termination of their relationship with New York affiliates was a reaction to the wording of the law.
In Colorado, the reporting requirements were not tied to the affiliates in any way. Amazon is terminating the affiliates in protest and encouraging them to contact their state government to complain about the new law.