Performance Marketing Association has just posted:
On Thursday February 25, 2010, Governor Ritter signed into law HB 1193. This bill no longer includes any reference to affiliate nexus or the concept of an advertising tax. The final bill can be found here. It does, however, still impact online retailers, who should consult tax and legal experts.
The bill will become law in just 2 days — on March 1, 2010.
The wording of the Colorado bill is indeed very different from what’s been passed in states of New York, North Carolina and Rhode Island, and thanks to the testimony of affiliate marketers during the hearings, affiliates are not being made the primary object of it. Many of the traditional media channels have picked the news up. The Denver Post, for example, wrote:
House Bill 1193 … originally was intended to tax out-of-state Internet retailers that have “affiliates” in Colorado that market the retailers and direct shoppers to the retailers’ websites.
The hearings on HB 1193 by both House and Senate finance committees generated considerable testimony by business owners whose operations would have been jeopardized if the introduced version had become law. The outcry from these businesses caused legislators to significantly amend the bill, thus saving hundreds of jobs.
The rewrite of HB 1193 illustrates that some legislators did not analyze the potential harmful consequence of this bill to businesses before it was introduced.
The rewrite of the bill still affects online businesses. It affects everyone “doing business in this state” by soliciting “business from persons residing in this state and by reason thereof receiving orders from, or selling” to “such persons residing in this state”. The bill prescribes that “each retailer that does not collect Colorado sales tax shall notify Colorado purchasers that sales or use tax is due on certain purchases made from the retailer and that the state of Colorado requires the purchaser to file a sales or use tax return” [underlining mine]. Also, retailers that do not collect CO sales tax “shall file an annual statement for each purchaser to the Department of Revenue … showing the total amount paid for Colorado purchases of such purchasers during the preceding calendar year or any portion thereof.” Read more in the final version of HB 10-1193 here.
Essentially, no Internet shopping is going to be tax-free for residents of Colorado starting from the coming Monday. But since compliance is required of all merchants that sell to Coloradans, all online merchants are affected, and should get ready.
The time is short, and as Melanie Seery has written:
Merchants are urged to retain professional counsel, a sales and use tax attorney or qualified accountant to make educated decision regarding this new law.
I certainly echo her advice.