Review of history of "Amazon Tax" battle and 10th Circuit's recent ruling upholding Colorado disclosure law.

1. Bennet Kelley

2. Amazon Tax Intro
• Quill Corp. v. North Dakota, 504 U.S. 298 (1992) – Due
Process and Commerce Clauses limit state taxing
authority to entities with a physical presence in state.
• Record state budget deficits plus Sen. Long’s Maxim
(“don’t tax you, don’t tax me, tax the guy behind the
tree”) led to passage of New York “Amazon Tax” in 2008.
Statute found state nexus with out-of-state retailers if
affiliate sales in excess of $10,000 in prior four quarters.

3. An Act Concerning the Collection of Sales and
Use Taxes on Sales Made by Out-Of-State
Retailers (2010)
Colo. Rev. Stat. § 39-21-112(3.5)
• Applies to “non-collecting retailers”.
• Must provide “transaction notice” to
purchasers that they may be subject to
Colorado use tax(1) to send a
“transactional notice” to purchasers
informing them that they may be
subject to Colorado’s use tax.
• Send purchasers who buy in excess of
$500 an annual purchase summary and
remind the consumer of their
obligation to pay use tax.
• Send annual report to state listing
names, addresses and amounts sold.

4. Amazon Tax Timeline
1992
Supreme Court sets physical presence test for state
taxation in Quill Corp. v. North Dakota.
2008
New York passes first “Amazon Tax” law.
2009
New York trial court dismisses Amazon/Overstock
complaint.
2010
Colorado passes disclosure requirements on “non-
collecting retailers”.
New York Appellate Division Upholds Dismissal of
Amazon/Overstock complaint.
2011
Direct Mktg. Ass’n v. Brohl: DMA wins injunction
against Colorado law in Colorado federal court.
2012
Direct Mktg. Ass’n v. Brohl: DMA wins summary
judgment on Commerce Clause claims.
2013
Direct Mktg. Ass’n v. Brohl: Tenth Circuit reverses
Colorado injunction. Preempted by federal Tax
Injunction Act. DMA then files for injunction in state
court in Direct Mktg. Ass’n v. Colo. Dep’t of Revenue.
New York Court of Appeal upholds Amazon.com
dismissal.
Supreme Court denies Amazon.com petition for cert.
2014
Direct Mktg. Ass’n v. Colo. Dep’t of Revenue: CO District
Court enjoins enforcement of Colorado law.
Direct Mktg. Ass’n v. Brohl: Supreme Court reverses
10th Circuit finds that restraining statute does not
“enjoin, suspend or restrain the assessment, levy or
collection” of Colorado tax as prohibited by Tax
Injunction Act. In concurrence, Justice Kennedy
suggests revisiting Quill.

5. The Kennedy Concurrence
• But in 1992, the Internet was in its infancy.
By 2008, e-commerce sales alone totaled
$3.16 trillion per year in the United States.
Because of Quill and Bellas Hess, States have
been unable to collect many of the taxes due
on these purchases.
• Although online businesses may not have a
physical presence in some States, the Web
has, in many ways, brought the average
American closer to most major retailers. A
connection to a shopper’s favorite store is a
click away—regardless of how close or far
the nearest storefront. . . . As a result, a
business may be present in a State in a
meaningful way without that presence being
physical in the traditional sense of the term.
• Given these changes in technology and
consumer sophistication, it is unwise to
delay any longer a reconsideration of the
Court’s holding in Quill. . . . The legal system
should find an appropriate case for this
Court to reexamine Quill and Bellas Hess.

6. 10th Circuit Reverses . . . Again
Limits Application of Quill
• Quill applies only to the collection of sales and use taxes, and the Colorado Law does
not require the collection or remittance of sales and use taxes. Instead, it imposes
notice and reporting obligations.
No Facial Discrimination
• Law “does not distinguish between does not distinguish between in-state and out-
of-state economic interests. It instead imposes differential treatment based on
whether the retailer collects Colorado sales or use taxes.”
• No explicit geographic distinctions drawn.
• Glosses over statute title and fact that only out-of-state sellers will not collect use
tax because of Quill.
No Discriminatory Effect or Undue Burden
• DMA does not point to any evidence establishing that the notice and reporting
requirements for non-collecting out-of-state retailers are more burdensome than the
regulatory requirements in-state retailers already face.
• Because the Colorado Law’s notice and reporting requirements are regulatory and
are not subject to the bright-line rule of Quill, no undue burden analysis required.
• En Banc Review Denied
Judge Matheson

7. Marketplace Fairness Act
• Grants state the authority to
collect from out-of-state
retailers regardless of in-state
presence, so long as they
simplify sales tax collection
either through the
Streamlined Sales and Use Tax
Agreement (SSUTA) or
following certain mandated
steps.
• Passed Senate in 2013 (69-27).
No action in House.
• Senate vote likely this year,
but no action anticipated in
the House.