Connecticut "Amazon" Provision Signed Into Law, Colorado Takes Steps to Modify Its Reporting Rule

The momentum that began building earlier this year with respect to the so-called "Amazon" laws has carried on into the spring as state legislatures continue to debate the advisability of such provisions.  Connecticut, however, has joined the growing number of states that have actually enacted such a law, with the governor signing the state's Amazon bill into law on May 4.  On the other end of the spectrum, the Colorado House has recently passed a provision that would significantly pull back the Amazon law that it enacted last year.

The Connecticut Amazon Law Is Effective July 1, 2011

On May 4, the governor of Connecticut signed into law Senate Bill 1239.  Section 128 of that bill contains a provision that imposes tax-collection and -remittance requirements on certain providers of goods and services.  The Connecticut law follows the "New York model" in that it imposes tax-payment obligations rather than information-reporting requirements, as required under the "Colorado model." 

Under the new Connecticut law, the state's definition of a "retailer" includes persons who sell goods or services and who enter into agreements with resident independent contractors (or other representatives) under which the residents are paid commissions or other consideration for referring potential customers to the retailers.  Such referrals include those done by link on an Internet website, or otherwise. 

One major difference between the Connecticut law and the similar laws in other states is that the provision applies if a retailer's cumulative gross receipts from customers referred by its in-state affiliates exceed $2,000 during the preceding four quarters.  That threshold is lower than in other states and will be much easier to trigger for smaller retailers. 

Like the New York law, the Connecticut law operates by creating a presumption that such retailers are soliciting business in the state through their in-state representatives.  That presumption may be rebutted by showing that the residents with whom the retailer had agreements did not engage in any solicitation in the state that would satisfy the nexus requirements of the U.S. Constitution for the preceding four quarterly periods. The new provision will be effective July 1, 2011. 

Colorado House Votes to Modify State's Amazon Law

As indicated above, Colorado has enacted a unique Amazon-style law under which out-of-state retailers who make sales to Colorado customers are not required to collect the state's sales and use taxes but are subjected to several onerous information-reporting requirements. That statute has been the subject of litigation in federal court, and the state is currently enjoined from enforcing the new law due to concerns that it violates the Commerce Clause of the U.S. Constitution.  That litigation is currently ongoing. 

Despite the pendency of that lawsuit, the Colorado House voted on May 5 to repeal the information-reporting requirements and replace them with a single requirement that the retailers provide Colorado purchasers with post-purchase notification that they may be subject to Colorado use tax on their purchases.  Such notifications would need to provide a link to the Department of Revenue's website, where the purchasers could obtain more information about their tax obligations.  (Read the text of the bill.)  This is certainly an interesting development, and we will continue to monitor the status of that legislation.