Attempt to Repeal E-Fairness in Colorado Fails; Texas Senate Committee Passes Bill

Sales tax fairness successes continued this week as an attempt to repeal a sales tax fairness law in Colorado failed and the Texas Senate Finance Committee unanimously passed sales tax fairness legislation.

In Colorado, sales tax fairness opponents seeking to repeal e-fairness legislation passed earlier this year [1] ran out of time this week when the Democratic-led Senate allowed the legislative session to end without a vote, as reported by the Denver Business Journal [2]. The attempt to repeal the state’s sales tax fairness law (HB11-1318) had passed Colorado’s House of Representatives overwhelmingly and the proposed legislation looked to have momentum on its side.

Last week, members of the American Booksellers Association and other independent coalitions called their state senators to urge them to stand up for Main Street and vote against the repeal.

“We are very pleased that the Colorado Senate chose to end the legislative session without a vote on a bill that, remarkably, actually sought to reward remote retailers that fired their Colorado online sales agents rather than comply with the state’s sales tax laws,” said ABA CEO Oren Teicher. “It’s very heartening to see the Colorado Senate go to bat for in-state businesses. As we noted when Colorado passed its sales tax fairness legislation last year, we believe the best answer to sales tax inequity would be for the Colorado legislature to pass an affiliate nexus bill similar to those in Arkansas, Connecticut, Illinois, Rhode Island, North Carolina, and New York, rather than to focus on use tax. But let’s be clear: Had this repeal passed, sales tax fairness would have been effectively derailed in Colorado.”

Teicher stressed that HB11-1318 “was a bill that sent entirely the wrong message: that bullying tactics from such online giants as Amazon.com could force legislators to grant out-of-state retailers special treatment. We want to thank our member bookstores for making sure the voice of Main Street was heard, and we wish to thank Senate Majority Leader John Morse (D-Colorado Springs) for his forceful leadership in the face of special-interest pressures.”

HB11-1318, if passed, would have repealed HB10-1193, Colorado’s sales tax fairness law that requires out-of-state retailers either to collect and remit sales tax for purchases made by Colorado residents or to inform their Colorado customers that they owe use tax on any purchase they have made. The law also calls for out-of-state retailers to report general purchase data to the state so it can assess use tax owed by consumers.

The Direct Marketing Association has challenged HB10-1993, and earlier this year a judge granted DMA a temporary injunction staying enforcement of the law while the challenge is heard.

Sen. Morse told the Denver Business Journal that the bill merely gave into a corporation that didn’t want to pay taxes to the state like every local business. “It’s a lousy bill. Amazon needs to be a good corporate citizen, and they’re not,” Morse stated. “For whatever reason, the House decided to roll over. We’re in litigation. And I think there’s a chance we can win.”

ABA will continue to pursue an affiliate nexus solution in Colorado, Teicher said. “This year we’ve seen a number of states pass affiliate nexus laws in an effort to level the playing field for Main Street. Ultimately, we believe Colorado should take the next step and join with those states that passed clarifications to sales tax laws so that remote retailers with broad networks of online affiliates understand that they are required to collect and remit sales tax to the state. Bookstores in Colorado will continue to work with a broad coalition of in-state businesses to level the playing field in the state.”

Sales Tax Legislation Moves Closer to Passage in Texas

One state that took another step toward sales tax fairness this week is Texas.

The state Senate Finance Committee, led by Chairman Steve Ogden (R-District 5), unanimously passed HB 2403, a bill that would require companies like Amazon.com and Overstock.com to collect and remit sales tax for orders made by Texas residents.

HB 2403 clarifies the law involving nexus, whether a business has a presence in Texas and is subject to all applicable taxes and laws. It passed in the House on its third reading with 125 votes.

Similar legislation by Senator Royce West, SB 1798, passed the full Senate recently 29 - 2.

“The Amazon business model of tax avoidance is being challenged in state after state,” said Eric Bearse, spokesman for the Alliance for Main Street Fairness (AMSF), in a statement. “States across the country are looking to put an end to tax advantages for out-of-state, online-only retailers. Amazon wants to make a bunch a money without contributing a dime to our schools, hospitals or infrastructure, and while putting Texas businesses at a significant disadvantage. We’re here to say, ‘no special breaks for large, out-of-state corporations.’”

HB 2403 passed the Senate Finance Committee by a vote of 10 - 0. It is likely to be on the Senate calendar in a few days.