Colorado residents will begin paying state sales tax on their Amazon.com purchases starting Feb. 1, the online retail giant said Friday.
“I can confirm that Amazon will be required to collect sales tax in Colorado beginning on Feb. 1,” an Amazon spokeswoman wrote via e-mail to The Denver Post. She would not comment further.
With the addition of Colorado, Amazon will be collecting sales taxes on purchases from 28 states. The change was first reported by the .
Colorado Department of Revenue officials confirmed Amazon’s plan to charge and remit collections from Colorado’s 2.9 percent sales tax, but declined to say what spurred the change. It is unclear whether Amazon will be collecting sales taxes for Colorado municipalities, spokeswoman Lynn Granger said.
“Currently, if an out-of-state retailer does not assess Colorado sales tax on online purchases made by Coloradans, consumers are required to self-report and remit use tax in lieu of sales tax for those purchases,” she said.
The collection of sales tax by online retailers has been a heavily contested issue in recent years in Colorado, where the constitutionality of its so-called “Amazon-tax law” has been challenged in court.
State law requires online retailers to track purchases made by people in Colorado and report the amount of sales tax that should have been paid. The companies also must advise the buyers of their tax obligations.
Under federal law, retailers that don’t have a presence in the state can’t be forced to collect the taxes, triggering the self-reporting requirement by consumers.
Amazon began collecting sales tax last year and . In both states, the retailer was planning to add data centers or distribution facilities.
In October, began paying 6 percent sales tax on Amazon purchases to comply the state’s “Main Street Fairness” law. That law, requiring online retailers with a physical presence in the state to collect sales taxes, was enacted to level the playing field between Internet sellers and traditional stores.
In 2014, the Department of Revenue estimated Colorado was losing to online “tax leakage” annually.
The on its law since 2010. The fight but in March it was sent back to .
A decision is expected in the Tenth Circuit Court case in the first quarter of this year, said Michael Uehlein, a spokesman for the New York-based Direct Marketing Association.
“DMA continues to spearhead a legal challenge to Colorado’s unconstitutional tax and data-collection scheme,” he said. “Requiring out-of-state sellers to disclose private purchase information to the state’s Department of Revenue violates both the Commerce Clause, as well as the privacy of the business-to-customer relationship. DMA has won every argument in this litigation and we are confident the Tenth Circuit will support DMA’s argument and find Colorado’s notice-and-report requirements unconstitutional.”
Alicia Wallace: 303-954-1939, awallace@denverpost.com or @aliciawallace
