Colorado Internet-tax Case Could Change Online Shopping

Buying things online could get pricier after the U.S. Supreme Court rejected a case Monday that could ultimately lead to states collecting billions of dollars in sales taxes lost to increasingly popular internet retailers.

The court would not hear a challenge to a Colorado law requiring online sellers such as Amazon.com to notify customers and the state how much they owe in taxes. State officials have estimated that Colorado alone has been missing out on as much as $172.7 million a year.

At least three other states -- Louisiana, Oklahoma and Vermont -- have passed similar laws that could take effect given the resolution of the Colorado case.

Though the court didn't endorse Colorado's law and could even weigh in against it if given a different case, other states are likely to see Monday's move as a green light to step up collection efforts. That comes despite a 1992 Supreme Court decision saying retailers must have a physical presence in a state before officials can make them collect sales tax.

Online shoppers always have owed state sales taxes on their purchases, but the rule has been widely ignored. States have spent years examining ways to capture those lost tax dollars, but their options are limited when the retailers are not based in the state.

So-called Amazon taxes that started in New York have not been adequate to fill the widening gap, said Mark Behlke, director of budget and tax policy for the National Conference of State Legislatures.

Sales taxes account for about a third of revenue in many states, more in those with no income taxes, such as Texas and Florida. And with online sales going up about 15 percent a year, states are increasingly feeling the effects of those taxes going unpaid.

The Colorado Legislature found a possible solution in 2010 when it passed a law...

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Colorado Internet-tax Case Could Change Online Shopping

Buying things online could get pricier after the U.S. Supreme Court rejected a case Monday that could ultimately lead to states collecting billions of dollars in sales taxes lost to increasingly popular internet retailers.

The court would not hear a challenge to a Colorado law requiring online sellers such as Amazon.com to notify customers and the state how much they owe in taxes. State officials have estimated that Colorado alone has been missing out on as much as $172.7 million a year.

At least three other states -- Louisiana, Oklahoma and Vermont -- have passed similar laws that could take effect given the resolution of the Colorado case.

Though the court didn't endorse Colorado's law and could even weigh in against it if given a different case, other states are likely to see Monday's move as a green light to step up collection efforts. That comes despite a 1992 Supreme Court decision saying retailers must have a physical presence in a state before officials can make them collect sales tax.

Online shoppers always have owed state sales taxes on their purchases, but the rule has been widely ignored. States have spent years examining ways to capture those lost tax dollars, but their options are limited when the retailers are not based in the state.

So-called Amazon taxes that started in New York have not been adequate to fill the widening gap, said Mark Behlke, director of budget and tax policy for the National Conference of State Legislatures.

Sales taxes account for about a third of revenue in many states, more in those with no income taxes, such as Texas and Florida. And with online sales going up about 15 percent a year, states are increasingly feeling the effects of those taxes going unpaid.

The Colorado Legislature found a possible solution in 2010 when it passed a law...

Comments are closed.