Industry Eye: Legal Matters - Colorado Invades Consumer Privacy to Collect Sales Taxes

Direct marketers maintain that the new law undermines their relationships with customers and discriminates against interstate commerce because the legislation effectively applies to out-of-state retailers only. The Supreme Court's 1992 Quill decision bars states from imposing tax collection obligations on retailers that lack a physical presence (so-called "nexus") in the state. Remote sellers argue, however, that the Colorado legislation is essentially a form of government blackmail. Unless remote sellers waive their constitutional rights and agree to collect sales tax on all sales to Colorado residents, the resulting reporting obligation will alienate customers and cause a loss of business.