Colorado Politics

Coffman leads attorneys general support for taxing online sales

Colorado Attorney General Cynthia Coffman is among 36 state prosecutors supporting South Dakota’s legal bid to collect sales taxes from out-of-state internet retailers.

The case could have national implications for e-commerce, as well as the price consumers pay online.

States haven’t been able to tax online sales since a court ruling in 1992 that required retailers to have a store, office, warehouse or sales agent in the state. That puts brick-and-mortar locations at a disadvantage to online retailers.

South Dakota is asking the U.S. Supreme Court to review whether retailers can be required to collect sales taxes in states where they lack a physical presence.

A rural state, South Dakota shoppers rely on Internet markets for goods, but the South Dakota Department of Revenue estimated it could lose as much as $50 million in sales taxes for a state of just 860,000 people.

Attorneys general from states including Minnesota, North Dakota and Wisconsin singed on to the friend-of-the-court brief, titled “Brief from Colorado and 34 Other States and the District of Columbia.”

“The problem with the physical-presence rule is that it was first conceived of in 1967, two years before the moon landing and decades before the first retail transaction occurred over the Internet,” Coffman states in the brief. “The rule is therefore not responsive to the ‘far-reaching systemic and structural changes in the economy’ caused by the Internet. If anything, the rule impairs rather than advances the Commerce Clause’s underlying objective of promoting a free market undisturbed by discriminatory advantages.”

The entire brief can be read by clicking here.

South Dakota Attorney General Marty Jackley’s office said this week that organizations ranging from the National Governors Association to the National Retail Federation have filed friend-of-the-court briefs supporting South Dakota’s petition to the high court, as well as business groups, federal lawmakers and public officials’ associations.

 
Richard Vogel
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