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In a letter last year, Ryan Lirette and I discussed the constitutionality of Colorado's "Amazon" law, which mandates information reporting by some out-of-state retailers who sell to Colorado residents without collecting use tax.1 Specifically, the statute requires retailers with $100,000 or more in annual sales in Colorado to notify customers of the latter's duty to report and pay use tax, to provide an annual purchase summary to customers with more than $500 in purchases, and to report customers' names, addresses, and purchase amounts to the Colorado Department of Revenue. Lirette and I concluded that Colorado's basic approach was consistent with the dormant commerce clause of the U.S. Constitution.
Judge Robert E. Blackburn of the U.S. District Court for the District of Colorado recently reached a different conclusion in Direct Marketing Association v. Huber. On January 26 he granted plaintiff's request for a preliminary injunction against enforcement of the statute, after concluding that the plaintiff had shown the requisite "substantial likelihood" of prevailing on its claim that the statute violates the dormant commerce clause.2 The injunction protects those sellers whose only contact with Colorado is by common carrier or U.S. mail.
Judge Blackburn concluded that the Amazon law discriminated against interstate commerce and imposed an undue burden on it. Rather than repeat all of the points that Lirette and I made last year, I comment on a few key aspects of the decision. Notably, although Judge Blackburn ostensibly recognizes collection of use tax as a legitimate state interest, his analysis logically implies that the imposition and collection of use tax is improper.
Alan D. Viard is a resident scholar at AEI