There is no shortage of illuminating anecdotes to describe the infamous complexity of the federal tax code. Among the most incandescent is the one that points out that the tax code is roughly seven times longer than the King James Bible, when it really ought to be reformed accordingly so as to reflect only the single sentence “Thou shalt not covet thy neighbor’s goods.” 

Colorado corrects some of the economic follies displayed in the federal tax laws by the simple and efficient expedient of incorporating a flat income tax. But the state makes up for this fiscal clarity by harboring a sales tax regime that borders on chaos, enough to spur serious legislative exertions to bring about some semblance of order and sanity. Those gilded efforts have suddenly encountered a gaping impediment.

 In South Dakota v. Wayfair Inc., the state of South Dakota argued that it had the right to collect sales tax from online businesses even if they did not have a physical presence in the state, as established in 1992’s Quill v. North Dakota (the Dakota’s apparently have a thing for charging out-of-state businesses sales tax). In finding for South Dakota, the Supreme Court reversed Quill, opening the door, some might argue Pandora’s box, for states to charge online and other out-of-state businesses sales tax. 

Wayfairevokes some murky issues. On one hand, it is argued, it evens the economic odds between local brick-and-mortar businesses, who by dint of existing within a certain state must collect and remit whatever sales tax that state requires, and online retailers who, by not having a “physical presence” in the same state thereby avoid the tax. The contention is that this is an artificial loophole that favors the online merchants, who can charge less for their product since they need not pass along a sales tax, never mind the savings in accounting and processing costs. Why, those in favor of South Dakota’s position argue, should Molly’s Bookstore on the corner be subject to sales tax while her online competitor is not? (Seldom is the corollary heard, “why tax Molly’s Bookstore?” but we’ll set that aside for now.)

 In the other corner, opponents of the decision point to the consequences of implementation, especially on small-midsized online businesses, which now must determine the not only the sales tax obligations in the state in which they are present, but now also in potentially thousands of jurisdictions around the country wherein their goods are purchased. 

On the grander scale, there are concerns over inflation – sales taxes, it bears repeating, are not paid by businesses, but by consumers through increased prices – as well as the simple fact that businesses will now be responsible for charging and remitting tax to a state from which they are offered no services insofar as they have no physical presence. Most importantly, to critics, is that the decision is an invitation to mischief by state governments, eager to find politically expedient means to maximize their revenue, and finding a gift-wrapped one in Wayfair.

 Here is where the Colorado Department of Revenue comes in; using the Wafairdecision as impetus, the Department announced a rule change that essentially copies the decision and translates it to the state level. Starting officially on December 1^st– the day immediately after the public hearing on the matter – Colorado businesses will have to collect and remit sales tax based on the location of the buyer, rather than based on their own location. For instance, if poor Molly’s Bookstore happens to sell a book online and ships it to a customer elsewhere, under current law she must only figure out which sales tax jurisdictions are in common – i.e., if the customer she shipped it to were in the same county or special district, Molly is obligated to charge state tax, plus whatever county and district sales tax applies to both her and her customer; if the customer is on the other side of the state, likely only state sales tax would apply. Under the new rule, she will have to figure out what sales taxes – county, municipal, special district, or any other – are owed in the customer’s location, and charge and remit those to the applicable governments. Given that there is something on the order of 750 separate taxing districts in the state, one can see how that could be a problem for a business that dares sell goods outside its own neighborhood.

It has not been lost on retailers that this rule is coming into effect just as the busy Christmas shopping season starts. Out of abundant generosity, the Revenue Department has announced that it will permit extensions until March 31, 2019 for businesses which cannot meet the Dec. 1 deadline; but that only begs the question of why not just delay the rule until then and spare Molly the bureaucratic headache during the busy Advent season? 

Even better, before cashing in on the bounties teased by Wayfair, why doesn’t the state wait until they simplify the filing system for business owners with a single point of remittance, and allow the Legislative Sales and Use Tax Simplification Task Force to complete the good work it has begun in modernizing the system? Better yet, why doesn’t the state shed its reputation as possessor of the nation’s most chaotic sales tax regime, and sign on to the Streamlined Sales Tax effort, like most other states have done?

 Well, it may just be because making things simpler for the business owner might mean foregoing a helping of taxpayer’s dollars, and the first order of government, after all, is maximizing its share of what others earned. Someone, somewhere, once labeled that “covetousness.”