According to a Tax Foundation article, on January 26th, a federal judge enjoined enforcement of a Colorado law that essentially places the burden of collecting state and local taxes for purchases made on online, on the online retailer. This legislation, which is often referred to as an “Amazon tax,” has been challenged on Constitutional grounds. The article states that Judge Robert E. Blackburn held that “the plaintiff has shown a substantial likelihood that it will succeed in showing that the act and the regulations are discriminatory because, in practical effect, they impose a burden on interstate commerce that is not imposed on in-state commerce.”
Currently, New York, North Carolina, and Rhode Island, have laws that requires retailers that have contracts with “affiliates”-independent persons within the state who post a link to an out-of-state business on their website and get a share of revenues from the out-of-state business-to collect the state’s sales and use tax. Other states are considering imposing similar Amazon tax laws.