Colorado Internet Retail Tax – Bill HB-1193
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We started this blog so that online marketers can discover info about the proposed internet retail tax bill in Colorado.
If you’re not familiar with this bill and how it can affect your online business we have a number of resources you should review right away.
Here’s an excerpt from a letter we received from Overstock which explains the situation.
“Overstock.com values your advertising efforts on our behalf, and we hope to be in a position to continue our business connection for years to come. However, we are writing to inform you the Colorado state legislature has introduced a bill which puts our continued relationship in jeopardy. HB 1193 (Concerning the Collection of Sales and Use Taxes on Sales Made by Out‐of‐State Retailers) was introduced on January 22, 2010. We are told the bill is moving quickly. This bill is modeled on a bill first passed in New York. The legislation attempts to establish responsibility for collection of sales tax for out‐of‐state retailers if those out‐of‐state retailers use Colorado‐based affiliate advertisers.
We believe such bills are not only harmful to business, but unconstitutional and contrary decisions by the U.S. Supreme Court. More importantly, if HB 1193 passes, Overstock.com will have to sever relationships with Colorado Affiliates before the bill becomes law. We have done this in each state where such legislation has passed: New York, North Carolina and Rhode Island.”
As Affiliate Marketers who live in Colorado, we know this bill is a really bad idea for the State of Colorado and for small businesses. The State will will lose millions in Tax revenues as Affiliates are terminated and move their businesses and families out of the State.
Feel free to share your thoughts below.
31 Comments to “Colorado Internet Retail Tax – Bill HB-1193”
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States are desperate for tax money so it’s no surprise they would go after any and all revenue streams. However they’ve missed the fact that ‘affiliate marketers’ are independent and Overstock.com and other companies who utilized independent marketers will lose MILLIONS if such a bill is passed. RedHeadline will follow up with this as well.
They don’t get it. Merchants, retailers, and networks are point blank telling affiliates in Colorado that they will be dropped if the law passes.
Companies are being FORCED to move operations out of state or go out of business. This will not be a choice, retailers flat out will not work with companies in Colorado. The revenue will be gone and along with it the taxes already collected on said revenue.
This is exactly what happened in the other states that these laws passed (IE New York) and this is exactly what will happen here.
The legislators writing this law know nothing about the industry or e-commerce in general and they look just plain silly.
So, one by one overstock, amazon, and all the other affiliate-based systems will just count states out of their referral payments and new business funnels? I’m certainly not for taxing the Internet but if it ever actually passes, certainly all these big companies will come up with some alternative model and you’ll see them suddenly “opening up” again so that affiliates will be able to sell in that state.
Of course, some States will finally realize that Affiliates actually pay State taxes on their earnings and contribute millions to their economies.
Who knows they may actually try to attract Affiliates to move out of other “advertising tax” States.
This sort of attitude is to be expected with our current government mindset. Tax anyone making money to penalize them for doing so. Socialism at it’s best. Perhaps spending responsibly would make the current tax revenue go further.
[...] This post was mentioned on Twitter by New Following, Miles T. Miles T said: Colorado Internet Retail Tax Bill HB-1193 – this is not good for affiliate marketers, product creators or jobs. http://ow.ly/119q8 [...]
My husband and I have been coordinating affiliate efforts on this bill. In fact, I testified before the finance committee yesterday about this matter.
It’s important that we stick together and have the same message, Make sure to register with the http://www.performancemarketingassociation.com so that you’ll get the official updates and direction on what to do next. I’m not part of the PMA, but they have been wonderful in guiding us rookies through the workings of the legislature. Their experience gleaned from other states fighting the same issue has been invaluable.
With coordination and enthusiasm, we can make a huge difference in the final result.
There is a Facebook Group also dedicated to fighting this legislation. Copies of the bill, contact information for local Democratic leaders and other information is available there.
http://tiny.cc/8H3h1
Thanks!
I think it is not right to do this they will lose more money than what they will be able to earn, it’s just common sense, this will not only affect families, but will also affect big and small businesses that do internet advertising. I’m not from Colorado but if one gets approved it will eventually move to my state, and I’m totally against it. we should all move to Mexico or other countries! jo jo jo.
I have spoken with and corresponded with numerous state representatives senators about this proposed tax. I have also posted a complete email list of state senators on Facebook in the Colorado Online Marketing Association (COMA) forum. In addition, I posted a letter that I have been sending to senators on both sides that may be helpful. Please feel free to use it as an example to compose an email of your own asap this morning! The hearing is today, so please act quickly. Rebecca from PMA and Jen Goode from COMA informed me that we have a large number of affiliate marketers attending the senate hearing today but HEY – the more people who attend, the better. If your internet business is important to you, get off your duff, walk away from your computer and get proactive by attending the hearing to show our opposition to this harmful legislation.
We received more termination letters from company’s being proactive about this bill. How can these politicians be so stupid? The State needs money so they decide to force 1000’s of taxpayers to move or incorporate out of Colorado. Brilliant!
As an internet retailer in Colorado, I will be penalized for being here. (6 websites) I pay state income taxes, real estate taxes, business taxes, license fees, payroll taxes, and sales tax for Colorado sales. They are re-writing the law to make me less competitive, which will, eventually, put me out of business and put 6 Coloradans out of work. Look at the states where this has already been implemented! Internet taxes = loss of jobs, loss of revenue.
I’ll bet Kansas will welcome us. I will not wait to go out of business. I’ll make plans to move the day after it passes. I promise.
Jim Thompson
The Thompson Group, Inc.
Denver, CO
We have successfully negotiated key amendments to HB-1193, and additional changes will be announced on Monday. Make sure to study the final version before making any life-changng decisions. I’ll be happy to explain the new language and what that means for Colorado affiliates. We’ve actually had tremendous support in the CO legislature which has translated into significantly improved legislation.
As an affiliate of several nationwide pet supply companies, this will bring my affiliate business to a halt. I have already been dropped by one because of this unfair bill and am waiting to hear from the rest of my merchants dropping me as well.
I have been out of work for awhile, and the affiliate commissions I receive from my merchants have been helping us get by. With that source of income gone, we are back to living hand to mouth again.
This bill should not be passed. It is unfair and violates the people’s rights regarding free enterprise. With the economy so bad and millions of us out of work, the government, both State and Federal, should help the people struggling to make ends meet any way they can and not remove us from another job we are trying desperately to keep.
The Colorado Democrats did not expect the big response from all of us in objection to this bill, HB10-1193. Now the bill is going to be rolled out on Monday and maybe, just maybe Overstock and other retailers will not have to put us all out of business. It is due to an amendment to the bill that has been secured. I read the first version on Thursday evening. The document seeks to exclude online affiliates from the tax. The language is being modified a bit, and the final version will come out on Monday morning.
You are correct Darlene. Government should not do this, but nevertheless, that is exactly what they are doing. Thanks to a big turnout against the bill, and the excellent leadership from the PMA, we may survive this thing yet. Another day or two will tell the story.
Colorado affiliates can watch the proceedings tomorrow on Comcast 165, or just head down to the Capital at 200 E Colfax ave.
So, they want to talk about how ordering online affects the brick and mortar business in Colorado. Nut since I live in Denver I find that the only time that I order online is when the brick and mortar business’ do not carry why I am looking for. I think it is a bunch of bs that they would say that and then turn around and say that these business’ are paying for our schools and roads. Well, I pay taxes in my paycheck every week that is supposed to go to that. I also pay that when I shop in local stores. But being as the fact that most of the business’ that people order from online are not located in Colorado why should they be required to pay for our schools and our roads. I think it is a ploy that the government is going to use to screw the American citizen again. It really is no wonder that the country that used to be the greatest power in the world is now failing and crumbling on itself from the onside out. All the government can think of doing is to find a way to take more and more from is. I guess this is the new American dream.
So our wonderful Democrats here in CO mess up the budget and then expect us citizens to bail them out. My mother taught me years ago the value of saving money. Her motto was: if you can’t afford it, don’t buy it! No one in our state government is bailing out the average wage earner! I’m sick of seeing my cost of living and vehicle registration fees sprial out of control and now these leeches in our state gov’t want MORE money from us!
I agree with Jim Thompson’s comment about moving. Its time to find another state where the budget isn’t totally out of control and the politicians aren’t trying to tax us all to death.
So, I’m about to order a new computer online from Dell (Austin, TX), and they’re telling me I owe them a state sales tax. Is that correct? has HB 1193 even gone into effect. Do the city and county of Denver have internet sales taxes in place?
Would like some guidance with which to back to Dell and challenge their sales tax charge.
Does the “internet tax” also cover purchases on eBay? Since eBay is not directly being paid, I think that eBay would be exempt. Can anyone confirm? I would like to know because I plan to stop buying from amazon.com and other retailers who will have to succumb to this process.
If I can buy from eBay and avoid the tax, I will do that instead.
Thanks.
Just a consumer here. The “dirty dozen” has me pissed off – especially the internet tax.
I pretty much have to buy most items in Ft. Collins. You are forced to as it is my closest city. We do support what little business Wellington has to offer. SInce the school district forces you to send your children in Ft. Collins, we have daily “opportunity” to purchase from the brick & mortar stores there. I avoid the high tax district on Harmony road
Ft Collins is in my mind wasteful as they blow money on dog parks, soccer fields and such. They want the county to pick up the burden. I do make purchases frequently at Amazon. Recently a purchase there was for a motorcylcle helmet from a Colorado affiliate.
I cannot see how my purchase on-line is any different from my buying an item in Cheyenne. The impact is my driving on Colorado roads, or UPS doing the same to deliver to me. Gov. Ritter has made a point to increase my vehicle fees. Is this not enough to compensate that impact?
Freight carriers no doubt pay considerable taxes to operate in Colorado. If the State wants to see me spend more locally, then reduce the taxes locally by removing all this irresponsible spending the state and towns are doing. If I am to heavily taxed on internet purchases, i will modify my spending to make more trips to Cheyenne. I will have to be more efficient as it is a longer trip.
But i think this will send a message back to the State.
It’s a real shame the republicans let Wall Street tank and got US all into this horrible mess we’re now in, but what’s almost worse are the really stupid GAMES being played out to balance the budget. A few months ago ch 9 linked to some online budget calculator that let users play around with various options for balancing the budget. I played for like 20 minutes and was still struggling. My 16-yr-old daughter figured out how to balance it in 2 minutes – just increase the state income tax by something like ZERO POINT THREE PERCENT, whatever the ridiculously LOW amount was!!
Why not do the SIMPLE thing here??? Write it so it’s not permanent but do the SIMPLE thing here.
The times they are a’changin’… rather than trying to oppress people into staying in the dark ages, figure out how to work WITH our changing economic and business landscapes.
Well, at least that’s what *smart* legislators would do….
So how many Colorado Amazon.com affiliates just lost your accounts today?
Overstock.com done this yet?
Any other affiliates been affected?
Can someone please let me know what this Article 10 of the United States Constitution means?
No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing it’s inspection Laws: and the net Produce of all Duties and Imposts, laid by any State on Imports or Exports, shall be for the Use of the Treasury of the United States; and all such Laws shall be subject to the Revision and Controul of the Congress.
I’m a little late to the conversation here, but when I read the constitution I thought this meant states were prohibited to tax across state lines. Or has this been debated adnauseum and someone has given the reason our HB1193 isn’t in violation of the United States Constitution?
Gosh, I didn’t understand this at all and was totally pissed off at Amazon.com. Now…the more I look at it…they have every right to do what they did. I mean, they could have given more notice (30 or 60 days). This would have allowed Affiliates to be prepared and get replacement merchants for each of the niches they were advertising for.
I don’t disagree with what Colorado is doing, though. They wouldn’t implement this tax law if we didn’t NEED it. I work for a Colorado-based company and we collect sales tax for any order shipping to our lovely home state of Colorado. It isn’t hard, and I don’t believe it is a big enough tax to be detrimental to our sales. It would be interesting to see what would happen if we got rid of the tax all together and did some A/B testing with regards to conversion rate.
I guess Colorado residents are just trained to pay sales tax to Colorado-based companies. And I don’t think we mind! Brick and mortar stores have been doing this for years in all states!
All in all, I believe a federal-level tax that blankets all 50 states would completely alleviate this problem. It would be equal across the board, and everyone would continue to make money. I would love to see this tax LOWERED, though. Maybe down to 1.9%.
Nancy, you haven’t thoroughly read the bill. It’s MUCH more complicated than you realize.
For starters, it’s not just collecting the state’s sales tax amount. It also requires retailers to collect all of the county, city, and local taxes in each area, based on the consumer’s address. This means there are over 400 taxing authorities to track just in CO. And each one must be paid quarterly, and each one has the right to audit the retailer. That leaves each online retailer vulnerable to 400 audits a year. Could your employer handle the risk of 400 audits each year right now from each state you sell to?
It’s not just a simple matter of placing the software into the system. This takes people to manage it, cut the checks and mail them, deal with tax changes, questions about which rate affects what addreses, etc. It’s VERY cumbersome. This could incapacitate some smaller merchants. Brick and mortar stores base their tax rates on the store’s location, not the customer’s home address, so the online tax version is much more complicated.
If the merchant doesn’t want to collect the tax, then they have to keep track of all purchases made online by Colorado residents, and notify those residents by Jan 31 of the following year about the sales tax owed to CO. In addition, those merchants must provide the state with a list of your online purchases, so the state can make sure you paid those taxes when you file your income tax. This is loaded with privacy concerns.
Affiliates are not the basis for nexus (relationship) required by law to collect tax. This Colorado law actually violates a US Supreme Court decision, so this will go through the court system and cost the state hundreds of thousands of dollars in future legal fees. Amazon is still required to either collect or track the taxes on purchases made by Colorado residents, whether they work with CO affiliates or not.
Amazon has already stated that they are willing to collect a national tax, but dealing with hundreds of taxing authorities in each state is not something they are willing to do. I can’t blame them. A national tax would be so much easier for everyone to comply with.
Frankly, I’m surprised any out-of-state retailer is still willing to sell to Colorado residents. We don’t have that much value as a state, compared to larger states like New York or California, and our new tax law is so demanding that I don’t think we’re worth the retail revenue.
There are other ways to collect this tax, but the state wasn’t willing to step up and pressure citizens to pay the taxes they owe. Instead the governor and legislators were willing to bully the out-of-state retailers to do so, so that the online companies look bad rather than the state government.
Oh, and concerning the timing issue, the governor signed the bill at the end of Feb with a March 1 implentation date. Amazon didn’t have any warning, so they couldn’t give affiliates any warning either.
Remember all this when you vote in November.
Well said, and there is this dreadful waiting time until we discover what other companies will be doing about this terrible bill themselves. Who will fire us? Which ones may decide the affiliates are valuable in Colorado, but not the customers. How long will it take before they all become aware of the law? Will there be 3 or 4 different avenues they will take?
Besides that, in November all Colorado residents have an option. We can vote these people out of office who are willing to make such laws, and vote in people who will repeal these laws. I am going to our neighborhood caucus tonight to pick candidates to run. We all need to do this not only in Colorado but across the entire nation or we may not have a country left after these democrats get done making bad laws.
When our tax law passed I had my own feeling of dread thinking about what could happen. If only the entire national business community would opt to ban sales to Colorado residents, then we would get tons of support from all sectors of the population. I could not venture a guess as to what some 200 top retailers will do, and then there are the other 800 we never mention (or more).
I suppose some will never pay any attention to it and will be surprised when the state comes knocking!
I do not mind the tax but feel that the companies should collect this tax. One thing we did not do need is more paperwork. Normally I do not have to file a income tax because my income is to small. However, if I shop online I will have to file a Colorado Income tax report if I purchase anything online. So I have decided to not make any online purchases because of this. Sadly I find that there are many things I cannot buy locally because the stores in Colorado just do not carry the type items for cell phone, clothing and shoes that I need. I feel that if there is to be a internet tax they should charge a flat 5 or 6 percent and half goes to the city and half to the state and it is the same for everyone across the country. The Federal Government should step in a resolve this quickly and then if a change needs to be made later then they could make it.
We need a sensible approach to the Internet tax and we need it soon,
I would like to see a list of companies the Colorado Dept of Revenue is going to be contacting. If they are only targeting amazon.com and overstock.com, I think Amazon and Overstock would have a case to not to comply with Colorado. The argument being why Colorado is not going after buy.com, QVC, HSN, and every other seller outside the state of Colorado. If you buy a Turbo Snake or a Smart Mop from Anthony Sullivan, then Colorado should also be asking that corporation for your address and how much you spent with them.
If Colorado misses just one company, then that can be and should be exploited by Amazon.com and every other company that is being asked to do this.
Not that Colorado has any teeth outside the state.
My name is Jack Minor. I am a reporter for the Greeley Gazette, a local newspaper in Greeley.
If there are any local residents that have been affected by this I would like to hear from you regarding a story I am working on regarding this tax.
I can be reached at jackminor@comcast.net of feel free to call me at 970-302-3470.
Thanks,
Jack Minor
I really hope they do not go through with this. This would be a terrible, terrible mistake. A lot of affiliates in the “pet” sector have been hit hard by this. The largest pet supplies retailer “doctors foster and smith” have shut down their affiliate program because of such legislation as this.
It really is a shame. This bill would do more harm than good.
It is apparent they have already gone through with it, and they fully intend to continue forward to enforcement as well. Here is the list of realistic “hopes” we Colorado affiliates have.
1. In November the balance of power changes. Republicans win the majority in both chambers, and win the Governor’s seat. Then a repeal process can begin.
2. The new bill will be challenged in court by any number of possible plaintiffs. Take your pick from the big list. ACLU, Online Retailers, A consortium of retailers and citizens, or other organizations. Eventually it gets shut down through the legal process.
3. the original “Amazon Tax” in New York gets to the Supreme Court of the US and gets overturned by another correct nexus ruling, and all other similar bills (including ours in Co) get reversed due to the ruling. We would be just lucky if it included the Colorado bill in this case, but it is a possibility.
Democrats all across the nation are feeling empowered right now after the passage of the health care act, and in many states they are ignoring the constitution of the United States and taking the law into their own hands. We have to vote all these democrats out of power everywhere to have any hope of saving our industry. These people want to take the entire nation down. Citizens who stand up and vote are the only hope, and in my case, I am also praying as well.