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Colorado Judge Deals Setback to State Efforts to Collect Internet Sales Tax

A 2010 Colorado law that requires online retailers such as Amazon to collect state sales taxes has been thrown out by the federal court, the Denver Post reports.

The judge concluded that the law did not treat in-state and out-of-state retailers evenly. The decision has partisan implications as the measure had been opposed by state Republicans.

Internet Sales Tax Issue Gaining Momentum

The decision will also likely complicate efforts by other states to get online retailers to collect local taxes–although it is hardly likely to slow down these initiatives.

In February, the Americans for Tax Reform noted that more states are moving in this direction. In Kansas, a bill is pending that would count third-party online advertisers as a physical nexus of the larger companies for which these entities advertise.

So, for example, an ad on the Kansas City Star’s website for an online retailer based in California would now mean that retailer has to collect tax in Kansas, it said.

Other states with similar legislation moving forward include Minnesota, Maryland, Arizona, Mississippi, Missouri and New Jersey.

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