The Colorado law does not appear to be legal or Constitutional, but that won't stop them.
I don't think a state can legally force an out-of-state retailer with no nexus in the state to collect taxes imposed on the citizens. However, the problem is that someone has to sue the state to get the new tax law overturned.
In Colorado, the situation is different. The state's new law doesn't link paying the tax to the presence of affiliates; instead, it requires out-of-state retailers to help enforce collection of the 2.9 percent state tax that online consumers in Colorado are technically supposed to pay already, though few know about it or do it.
I think this tax collection issue with Amazon affects a lot more states than just Colorado, North Carolina and Rhode Island. I thought Amazon had already been forced to drop affiliates in other states such as New York where the big battle between the state and Amazon was being waged. Affiliates are fighting this in more than a dozen states.
Affiliate Tax Laws - ABestWeb Affiliate Marketing Forum
A lot of merchants have dropped affiliates in states that are passing laws trying to force out-of-state merchants with no nexus to collect sales taxes. Most of these states are claiming that affiliates constitute a nexus, even though affiliates are not employees and are independent contractors.
Last edited by TopDogger; 15 March, 2010 at 16:11 PM.
"Democracy is two wolves and a lamb voting on what to have for lunch. Liberty is a well-armed lamb contesting the vote." -- Benjamin Franklin