DENVER—An opponent of Colorado’s Internet tax is appealing a court ruling that would allow the state to enforce the law, asking for another chance to convince the court that the measure’s new reporting obligations are unconstitutional.
The Direct Marketing Association asked for a rehearing of the case by the full 10th Circuit Court of Appeals after a three-judge panel ruled last month that the new law is constitutional and ordered that an injunction be lifted. However, the injunction will remain in effect until there is a final ruling on the case.
“The permanent injunction that the federal district court imposed on the state of Colorado so that they could not enforce the law remains in effect until after the 10th Circuit decides whether to hear the case or not,” said Jerry Cerasale, senior vice president of government affairs for the DMA.
While such full court requests are rarely granted, the DMA’s appeal could delay by weeks, if not months, Colorado’s ability to implement the law, which is intended to urge large Internet retailers to collect a 2.9 percent use tax on purchases.
The earlier court decision noted state and local governments stood to lose $172 million last year because of residents’ failure to pay the 2.9 percent use tax on e-commerce purchases from out-of-state retailers.
In its petition, the marketing association argued that the panel’s ruling conflicts with other appeals-court decisions, the Denver Post reported Thursday ().
The Internet tax law imposes extensive reporting requirements on Internet retailers that don’t collect Colorado’s use tax. Lawmakers passed the measure in 2010 to urge non-collecting retailers to start charging the tax on sales.
The DMA, which represents about 2,000 member businesses, challenged the law as unconstitutional. In 2012, U.S. District Judge Robert Blackburn blocked Colorado from enforcing the law, ruling it placed an undue burden on interstate commerce.
The appeals court panel ordered Blackburn to dismiss the DMA’s claims and to lift the permanent injunction. The decision cited the Tax Injunction Act, which states that federal courts shouldn’t restrain any state tax assessments if the disputed matter can be resolved by lower courts.
In the appeal filed Wednesday, the DMA argues that there are substantial questions concerning the availability of a plain, speedy and efficient remedy in Colorado state court.
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Information from: The Denver Post,
