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Elon Law Professor Andy Haile provides analysis of Colorado’s “Amazon” law

In a tax analysis report issued July 3 by State Tax Today, Elon Law Professor Andy Haile offers perspective on the constitutionality of Colorado’s “Amazon” law, which requires remote (online) sellers (like Amazon) to report to the Colorado Department of Revenue sales made to Colorado residents. This would allow the state to collect taxes due on those sales.

The State Tax Today report, “Tax Academics Diverge on Constitutionality of Colorado’s ‘Amazon’ Law,” discusses Haile’s disagreement with Colorado District Judge Robert Blackburn’s decision in Direct Marketing Ass'n v. Huber. Blackburn concluded that the state’s Amazon law impermissibly imposes an undue burden on interstate commerce in violation of the constitutional doctrine known as the “dormant” Commerce Clause. In a 1992 case called Quill Corp. v. North Dakota, the U.S. Supreme Court construed the dormant Commerce Clause doctrine as requiring that an out-of-state retailer have some type of in-state physical presence before a state may impose a tax obligation—such as collecting sales tax—on the retailer. Colorado sought to avoid running afoul of the Supreme Court’s decision in Quill by requiring that out-of-state companies simply report sales information to the state rather than collect tax on those sales.

According to the State Tax Today report, Haile views Judge Blackburn’s decision to strike down the Colorado law as “viable” but added that “he does not believe the extent of the burden for Colorado's reporting requirement is comparable to the tax collection burden at issue in Quill.” Moreover, according to the report, Haile does not view Direct Marketing Ass'n as a tax case, but instead, as a reporting case.

“Information reporting is substantively different and less burdensome than tax collection,” the report quotes Haile as saying.

"I think from an economic and competitive marketplace perspective, [Quill’s physical presence rule] makes no sense," Haile said in the report. He did state, however, that from a stare decisis and separation of powers perspective, arguments could be made for maintaining Quill.

Quill creates an absurdity when a company like Amazon can have a high level of sales in a state and not have to collect use tax, but a mom-and-pop company is required to collect,” Haile said.

Haile recently co-authored with Elon Law Professor Scott Gaylord an article on this subject, published in the September 2011 edition of the North Carolina Law Review, titled, “Constitutional Threats in the E-Commerce Jungle: First Amendment and Dormant Commerce Clause Limits on Amazon Laws and Use Tax Reporting Statutes."

Haile has also written specifically about the Colorado statute at issue in Direct Marketing Ass’n in a September 2010 State Tax Today article entitled “Defending Colorado’s Use Tax Reporting Requirement.” Haile’s most recent article on the states’ efforts to collect taxes on internet sales appeared in the 2012 edition of the Cardozo Law Review (Affiliate Nexus in E-Commerce).

State Tax Today is a publication of Tax Analysts, a nonprofit provider of tax news and analysis, serving more than 150,000 tax professionals in law and accounting firms, corporations, and government agencies, including tax professionals at the top 25 international law firms, 96 of the top 100 U.S. law firms, and the majority of the Fortune 100.

Click here for more information on Elon Law Professor Andy Haile.


Philip Craft,
7/17/2012 4:05 PM