"If you bought a [large purple] [censored] in Denver, the government must legally be told"
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tl;dr:So that it can collect sales tax from online retailers not in the state, such businesses now have to tell Colorado what their customers in that state have purchased*. SCOTUS declined to comment.
The law:
The ruling:
https://www.ca10.uscourts.gov/opinions/12/12-1175.pdf
*: Sort of. That's the way the article puts it, but the ruling phrases it as:
To assist the state in collecting use tax from in-state purchasers, most seemingly unaware of their tax responsibility, the Colorado legislature passed a law in 2010 that imposes three obligations on retailers that do not collect sales taxes—“non-collecting retailers”:
(Citations removed and numbered items moved into a numbered list for clarity- to send a “transactional notice” to purchasers informing them that they may be subject to Colorado’s use tax,
- to send Colorado purchasers who buy goods from the retailer totaling more than $500 an “annual purchase summary” with the dates, categories, and amounts of purchases, reminding them of their obligation to pay use taxes on those purchases, and
- to send the Department an annual “customer information report” listing their customers’ names, addresses, and total amounts spent.
DMA objected to these requirements and brought suit against the Executive Director of the Department.
and the law states:(d)(I)(A) Each retailer that does not collect Colorado sales tax shall send notification to all Colorado purchasers by January 31 of each year showing such information as the Colorado department of revenue shall require by rule and the total amount paid by the purchaser for Colorado purchases made from the retailer in the previous calendar year. Such notification shall include, if available, the dates of purchases, the amounts of each purchase, and the category of the purchase, including, if known by the retailer, whether the purchase is exempt or not exempt from taxation. The notification shall state that the state of Colorado requires a sales or use tax return to be filed and sales or use tax paid on certain Colorado purchases made by the purchaser from the retailer.
[⋮]
(II)(A) Each retailer that does not collect Colorado sales tax shall file an annual statement for each purchaser to the department of revenue on such forms as are provided or approved by the department showing the total amount paid for Colorado purchases of such purchasers during the preceding calendar year or any portion thereof, and such annual statement shall be filed on or before March 1 of each year.Both of which seem to indicate that all the Colorado government actually requires is "Citizen X spent $Y on taxable things in Category Z". So how much they know depends on how fine the categories are.
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@Dreikin said in "If you bought a [large purple] [censored] in Denver, the government must legally be told":
So that it can collect sales tax from online retailers not in the state
What?! No other sales tax works that way. I have to report to the state of Ohio how many books I've sold , not how many I buy. As a vendor, I'm responsible for paying that tax to the government, and they neither know nor care who buys them.
reads the article
Yeah, that's absurd. The transaction should happen in the seller's state only, just like mail-order.
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@Yamikuronue said in "If you bought a [large purple] [censored] in Denver, the government must legally be told":
@Dreikin said in "If you bought a [large purple] [censored] in Denver, the government must legally be told":
So that it can collect sales tax from online retailers not in the state
What?! No other sales tax works that way. I have to report to the state of Ohio how many books I've sold , not how many I buy. As a vendor, I'm responsible for paying that tax to the government, and they neither know nor care who buys them.
Technically, it's a use tax in this instance. The out-of-state company is telling Colorado how much its citizens have bought from it, so the state can go after the citizens for failing to pay use tax on the out-of-state purchases. Same idea as a sales tax, but the buyer pays it instead of the seller. The reason for this is because:
- SCOTUS has said use taxes are perfectly fine as a complement to sales taxes
- SCOTUS has said states can't force retailers without a physical presence in their state to pay sales tax in that state for sales to customers in that state.
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@Dreikin said in "If you bought a [large purple] [censored] in Denver, the government must legally be told":
@Yamikuronue said in "If you bought a [large purple] [censored] in Denver, the government must legally be told":
@Dreikin said in "If you bought a [large purple] [censored] in Denver, the government must legally be told":
So that it can collect sales tax from online retailers not in the state
What?! No other sales tax works that way. I have to report to the state of Ohio how many books I've sold , not how many I buy. As a vendor, I'm responsible for paying that tax to the government, and they neither know nor care who buys them.
Technically, it's a use tax in this instance. The out-of-state company is telling Colorado how much its citizens have bought from it, so the state can go after the citizens for failing to pay use tax on the out-of-state purchases. Same idea as a sales tax, but the buyer pays it instead of the seller. The reason for this is because:
- SCOTUS has said use taxes are perfectly fine as a complement to sales taxes
- SCOTUS has said states can't force retailers without a physical presence in their state to pay sales tax in that state for sales to customers in that state.
I would like to note that the introduction and background sections of the opinion are easy to read and cover a bit more about the distinction and relation of those two.
If you bought a dildo in Denver, the government must legally be told
Colorado Title 39. Taxation § 39-21-112 | FindLaw
