Federal Court Tosses Colorado's Amazon Tax

suraj.sun writes, quoting the Denver Post: "A federal court has thrown out a 2010 Colorado law, which had already been temporarily blocked in federal court last year, meant to spur online retailers like Amazon to collect state sales tax. 'I conclude that the veil provided by the words of the act and the regulations is too thin to support the conclusion that the act and the regulations regulate in-state and out-of-state retailers even-handedly,' U.S. District Judge Robert Blackburn wrote in his opinion. The law and the rules to carry it out 'impose an undue burden on interstate commerce' and are unconstitutional, the judge wrote. The tax mainly affected online sales of out-of-state companies that have in-state affiliates, usually generating sales through links on their websites." I wonder what this means for the plethora of similar bills in other states. Will Amazon continue to call for a national Internet sales tax if they are all struck down?

Comments

It's pretty black and white

[Ferzerp]

These laws are unconstitutional. The states are free to try to amend the constitution, but as it stands today, their inability to tax purchases like this is one of the most non-vague areas of our constitution.

Re:It's pretty black and white

[Anonymous Coward]

Not sure if troll? It prohibits "unreasonable" searches and seizures. They were asked, if you're going into gen-pop, is it unreasonable for you to be strip searched? They said no, its not, and here are several reasons. They didn't require all jails to strip search all inmates, they only said it was reasonable in that context, and Alito and Roberts, those evil hate mongering right wingers, added in some wiggle room saying there should be some exceptions.

This kind of judicial ignorance is why lawyers laugh at you. Yes, specifically, you.

Re:It's pretty black and white

[bkaul01]

You might try reading the opinion; virtually everything you said is factually incorrect.

The fellow had priors for obstruction of justice and use of a deadly weapon after having run from the cops in the past (he plead guilty to lesser charges), and was arrested on a bench warrant that (due to a clerical error) was still in existence for later unpaid tickets (which had since been paid). Neither side contested the question of whether he should've gone into the general population given his arrest (there was no other option, since he was arrested on a warrant, not merely detained for a traffic violation).

They don't argue that every inmate going into general population requires a strip search. The Court did say that deference to the judgment of jail administrators is needed in cases where they're not clearly in the wrong, and they said that a jail choosing to conduct such searches (for contraband, injury, delousing, detection of gang tattoos, and similar purposes) is not unreasonable for prisoners being put into the general population. Quite the opposite of suggesting that such a search be mandated, they did suggest that there are situations where it would not be appropriate, though in general it is up to the discretion of the officers involved.

See, for instance, Part IV:

This case does not require the Court to rule on the types of searches that would be reasonable in instances where, for example, a detainee will be held without assignment to the general jail population and without substantial contact with other detainees. This describes the circumstances in Atwater. See 532 U. S., at 324 (“Officers took Atwater’s ‘mug shot’ and placed her, alone, in a jail cell for about one hour, after which she was taken before a magistrate and released on $310 bond”). The accommodations provided in these situations may diminish the need to conduct some aspects of the searches at issue. Cf. United States Brief 30 (discussing the segregation, and less invasive searches, of individuals held by the Federal Bureau of Prisons for misdemeanors or civil contempt). The circumstances before the Court, however, do not present the opportunity to consider a narrow exception of the sort JUSTICE ALITO describes, post, at 2–3 (concurring opinion), which might restrict whether an arrestee whose detention has not yet been reviewed by a magistrate or other judicial officer,and who can be held in available facilities removed from the general population, may be subjected to the types of searches at issue here.

Petitioner’s amici raise concerns about instances of officers engaging in intentional humiliation and other abusive practices. See Brief for Sister Bernie Galvin et al. as Amici Curiae; see also Hudson, 468 U. S., at 528 (“[I]ntentional harassment of even the most hardened criminals cannot be tolerated by a civilized society”); Bell, 441 U. S., at 560. There also may be legitimate concerns about the invasiveness of searches that involve the touching of detainees. These issues are not implicated on the facts of this case, however, and it is unnecessary to consider them here.

And in Alito's concurring opinion:

It is important to note, however, that the Court does not hold that it is always reasonable to conduct a full strip search of an arrestee whose detention has not been reviewed by a judicial officer and who could be held in available facilities apart from the general population. Most of those arrested for minor offenses are not dangerous, and most are released from custody prior to or at the time of their initial appearance before a magistrate. In some cases, the charges are dropped. In others, arrestees are released either on their own recognizance or on minimal bail. In the end, few are sentenced to incarceration. For these persons, admission to the general jail population, with the concomitant humiliation of a strip search, may not be reasonable, particularly if an alternative procedure is feasible.

Re:What's really going on

[sangreal66]

Sure, if you want to just make shit up and blindly ignore the facts. Amazon has consistently lobbied for a federal internet sales tax.

Re:Best Buy

[Anonymous Coward]

If you think having to collect tax is a significant reason to the demise of Best Buy, clearly you haven't shopped at one in a long time.

Do you work for Goldman-Sachs?

[SuperKendall]

The Republicans want to repeal the bill because it IS bad. It may have one part that is good in there but mostly it just benefits really big banks or companies, and imposes WAY too many regulations on businesses (that again benefit larger companies because they have staff that can handle stupid overhead like that).

I mean, if you are all for benefitting large companies that is fine, but most people would like to see government support for them reduced and Dodd/Frank are KINGS of supporting large companies through government graft.

Re:Sure, but

[kidgenius]

Amazon has no presence in the state, so why should they have to pay sales tax? G.

The thing you, and many other people, don't realize is that no retailer, ANYWHERE, pays sales taxes on purchases you make....ever.....never ever.....never, never ever. The retailers merely COLLECT the tax from YOU on behalf of the the government. YOU are the one paying the taxes. And, no, this is not some weird "retailers pass the cost on" kind of thing. Sales taxes are paid by the consumer. That's why states have things called Use Tax, which is to cover things like mail-order and online. You are supposed to claim those purchases on your income tax forms at the state level, and then pay the appropriate tax. No one does it though, and that's why states are trying to find ways to get their lost revenue.

Re:Sure, but

[Dcnjoe60]

This benefits customers, because they get items cheaper. Amazon has no presence in the state, so why should they have to pay sales tax? Gas tax already covers any usage of the roads etc by shipping and delivery companies. And it's not a big hit for local businesses because for the extra $0.50 a customer gets to have the product now.

In short, the only ones who "lose" are Colorado politicians. And if there was a federal sales tax, Colorado wouldn't get a cut, anyway.

Amazon would not be paying state sales taxes. They would be collecting state sales taxes, like any other company doing business located in the state and remitting those taxes to the state on behalf of the purchaser. It is the purchaser, who benefits from the state sales tax as it is used to fund state services.

Where Colorado messed up is that they tried to levy sales tax on out of state purchases from a company that did not have a presence int he state. This has long ago been decided. What Colorado should have done is passed a bill that out of state companies, doing more than $X business in the state, must collect use tax on behalf of the state. Since use taxes are already deemed constitutional, having the vendor collecting them should not be a problem.

Re:Wow

[rilian4]

Not exactly. This was a state law that was struck down...Not a federal one. It sounds (I haven't read the ruling) like it was a proper ruling but it does nothing to curb the federal government...only state governments.

That said, I agree that the federal government has gotten away w/ far too much for far too long by claiming all kinds of powers under the commerce clause. No doubt about it.

Re:Sure, but

[Local ID10T]

Amazon has no presence in the state, so why should they have to pay sales tax? G.

The thing you, and many other people, don't realize is that no retailer, ANYWHERE, pays sales taxes on purchases you make....ever.....never ever.....never, never ever. The retailers merely COLLECT the tax from YOU on behalf of the the government. YOU are the one paying the taxes. And, no, this is not some weird "retailers pass the cost on" kind of thing. Sales taxes are paid by the consumer. That's why states have things called Use Tax, which is to cover things like mail-order and online. You are supposed to claim those purchases on your income tax forms at the state level, and then pay the appropriate tax. No one does it though, and that's why states are trying to find ways to get their lost revenue.

Not entirely true. You are correct that this is the way it is supposed to work, but in practice many small businesses find it less costly to pay the taxes than to collect them. I run one, and we do.

For our online sales, we do not collect taxes -they are too damn complicated, and the software packages available to calculate them are prone to errors that really piss customers off. It is simpler for our accountants to calculate the tax after the fact, on all sales that are applicable, and cut a check for the amount due. For our direct sales website, we do collect taxes, but for sales through affiliates, and channels (ebay, amazon, etc) we do not. The cost of getting it to work correctly is higher than the cost of paying the taxes ourselves, and it keeps our customers happier.

To put this post back on topic... I have received demand letters from the state of Colorado under this law - and after a quick reading, declined to pay them as it was obviously an extra-jurisdictional attempt to squeeze money out of us.

Re:Sure, but

[gv250]

no retailer, ANYWHERE, pays sales taxes on purchases you make

That may be true somewhere, but it isn't true in Illinois. Quoting the Illinois Department of Revenue: "Sales tax is a combination of “occupation” taxes that are imposed on sellers’ receipts and “use” taxes that are imposed on amounts paid by purchasers. Sellers owe the occupation tax to the department; they reimburse themselves for this liability by collecting use tax from the buyers."

And, 35 ILCS 120/2 "A tax is imposed upon persons engaged in the business of selling at retail tangible personal property ...".

In Illinois, at least, sales tax is quite clearly imposed upon the retailer, and not the retail purchaser. On a related note, when I was running a small business in Illinois I contacted the DOR and asked if I was obliged to collect sales tax from my customers. They advised me that I was under no obligation to collect sales tax, my only obligation was to pay it.