Last year Colorado passed a law requiring retailers who do not collect Colorado sales and use taxes to–
- “notify Colorado customers that the customer is required to pay use tax on the purchase;
- send an annual statement to each Colorado customer, summarizing the customer’s total annual purchases from the e-tailer; and
- file an annual information report with the Colorado Department of Revenue showing the total amount of sales made to each customer in Colorado.”
Colorado could then use this information to monitor residents’ compliance with state laws requiring reporting and payment of use taxes. E-Commerce Times reports that the Direct Marketing Association challenged the sale on the grounds that it discriminates against out-of-state retailers and burdens interstate commerce. Last month a federal court in Denver issued a preliminary injunction preventing the state from enforcing the law until its validity can be determined at trial.