The following is cross-posted from www.StopETaxes.com.
Earlier this year, Colorado became the first state to employ a new and controversial way to force consumers to pay tax on online purchases. House Bill 1193 required out-of-state retailers to provide the Department of Revenue with detailed customer information on purchases made, so that the state can pursue residents who fail to pay “use tax.” Use tax is sales tax on out-of-state purchases that requires the consumer, not the retailer, to collect and pay up.
North Carolina and Colorado’s push to collect sales information stems from a failed effort last year to begin taxing out-of-state purchases. Last fall, North Carolina joined Rhode Island and New York in passing an “affiliate nexus tax” law
, which requires online retailers to collect tax on consumers if company advertises on an in-state website. This effort too raises serious constitutional concerns, as retailers with no physical presence in a state cannot be required to collect taxes on consumers under the U.S. Supreme Court’s ruling in Quill v. North Dakota
In North Carolina and Rhode Island, retailers subsequently stopped advertising to avoid what many – including us – regard as an unconstitutional tax collection scheme. Both states have failed to collect any additional revenue from the tax hike, which is probably why the NC Department of Revenue began its pursuit to gather private consumer information. Meanwhile, a similar consumer information reporting bill is pending in California
It appears states will stop at nothing in pursuit of taxing online shoppers. First, with the affiliate nexus tax, states tossed aside the U.S. Constitution’s Commerce Clause and long standing legal precedent. Now their “Plan B” is to trample all over the First Amendment and privacy rights.