A federal court has struck down Colorado’s so-called “Amazon tax” that tried to apply state use taxes to the online affiliate sales of out-of-state companies.
Colorado legislators created the tax in 2010. A trade group, the Direct Marketing Association, based in New York City, sued in U.S. District Court for Colorado to overturn it.
On Friday, the federal court in Denver declared the 2.9 percent tax on purchases unconstitutional on the ground it was tilted unfairly against out-of-state retailers, and that it put an undue burden on retailers to either collect the tax owed by consumers or report consumer purchases to the state.
Judge Robert Blackburn’s ruling noted the legal language of the tax didn’t distinguish between in-state and out-of-state businesses, but the practical effect of the tax did.
“I conclude that the veil provided by the words ... is too thin to support the conclusion that the Act and the Regulations regulate in-state and out-of-state retailers even-handedly,” Blackburn wrote.