Another law looks like it will be repealed in 2010. First the 2010 federal law requiring small businesses to send a Form 1099 to small business for products and services was repealed and now a Colorado law requiring large online businesses to collect sales tax on products purchased by Colorado residents is making its way through the system to be repealed.. The issue is not whether purchases from internet retailers is taxable. Internet purchases have always been subject to state sales tax. The issue is that internet retailers do not collect the sales tax and remit it to the state. How can they? Sales tax collected for a resident in Fort Collins would be different than that collected for a resident in Greeley and I don’t even want to think about the sales tax for a Denver resident. All the jurisdictions, taxing authorities along with their maps of what area a resident is in makes it a nightmare to calculate the tax correctly for a business in Colorado let alone a business not familiar with our taxing authorities. Truth be told all states would like to figure out how to collect the revenue they are missing from internet sales but until states come up flat agreed upon tax for all 50 states I don’t see it happening.
But beware consumers, the large internet retailers may not be required to collect the tax, but you are still liable for it and should fill out a sales and use tax report at the end of the year for your online purchases. Written into the repeal is a section that online retailers of gross annual sales of more than $500,000 are required to notify Colorado consumers that they are responsible to remit the sales tax either by clearly posting it on their website or sending you an email. So you will no longer be able to say you didn’t know you had to pay sales tax on internet purchases.