Federal Judge Rules Originally Affiliate Nexus Tax Unconstitutional

Yesterday afternoon an important news came from Colorado. A Colorado Springs Gazette editor, Wayne Laugesen, wrote:

Back in 2010, then-Gov. Bill Ritter, D-Colo., signed into law a bill passed by the Colorado Legislature that instantly cost thousands of Coloradans their livelihoods. On Tuesday, U.S. District Judge Robert Blackburn tossed it out.

…Blackburn ruled that the law imposes “an undue burden on interstate commerce,” making it unconstitutional.

“Enforcing a reporting requirement on out-of-state retailers will, by definition, discriminate against the out-of-state retailers by imposing unique burdens on those retailers,” Blackburn wrote. [source, emphasis added]

The important court decision was also covered in The Denver Post yesterday:

The law had already been temporarily blocked in federal court last year, but U.S. District Judge Robert Blackburn’s ruling Friday permanently handcuffs it.

“I conclude that the veil provided by the words of the act and the regulations is too thin to support the conclusion that the act and the regulations regulate in-state and out-of-state retailers even-handedly,” Blackburn wrote in his opinion.

The law and the rules to carry it out “impose an undue burden on interstate commerce” and are unconstitutional, the judge wrote. [source, emphasis added]

Regardless of the predominant focus on the “undue burdens” on “out-of-state retailers”, and not much said about affiliate marketers (the group that suffers most from such laws), this ruling sets an extremely important precedent for the whole affiliate/advertising tax saga.

3 thoughts on “Federal Judge Rules Originally Affiliate Nexus Tax Unconstitutional”

  1. Geno did you see anywhere if Colorado plans on appealing the decision or not?

    It probably didn’t say much about affiliate marketers because the final version of the bill removed affiliates (although merchants still were gun shy and terminated affs over the bill).

    It’s still good to see a decision saying it’s unconstitutional. The Supreme Court already said it was but the states keep acting like it’s ok.

    Will be interesting to see if this decision is brought up with the next state that considers an affiliate tax.

  2. Kellie, of course, you’re right — the original of that Colorado bill HB1193 attempted to establish affiliate nexus, but the final version did indeed remove all references to affiliates. Thank you for reminding me! I’ve just added “originally” to the blog post’s title – to clarify this part.

    No, I have not seen anything about Colorado planning to appeal the decision. We’ll see.

  3. Pingback: Affiliate Tax Law Struck Down: 3 Problems With The Laws

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