DMA Urges Action on Colorado Tax Reporting Law

June 16, 2010 — DMA has sent a letter to its membership urging them to take action against a new tax reporting law in Colorado, explaining that the law is expensive, intrusive, and oppressive. The letter goes on to say that DMA and its members are filing suit against the state of Colorado in Federal Court, with the DMA acting as plaintiff.

The full text of the letter follows:

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Tax Reporting Law Threatens Your Business

Dear Marketer:

A new tax reporting law in Colorado (House Bill 1193) is targeting your business. The law is expensive, intrusive, and oppressive. You need to take action now, because this is not a problem limited to Colorado. If this bill stands in Colorado it will surely be picked up by other states looking to offset their reckless spending on the backs of your business.

The law requires non sales tax collecting out-of-state marketers to abide by three key requirements:

– Notify Colorado purchasers with every purchase that sales or use taxes are owed by the purchaser and that the purchaser's purchases will be reported to the Colorado Department of Revenue in an annual report detailing the total amount of all purchases on which sales tax was not collected.

– Provide the purchaser via 1st class mail with a year end summary of the purchases he/she made on which sales taxes were not collected

– Provide the Colorado Department of Revenue an annual report on the total amount of all the purchaser's purchases on which sales tax was not collected

DMA and its members are filing suit against the state of Colorado in Federal Court. DMA will act as the plaintiff so that no one business has to feel the brunt of any recourse from the Colorado Department of Revenue. DMA is acting now and you need to as well. Tennessee and California are considering similar legislation and others will soon follow.

A business with a 12 month buyer file of 500,000 would have to spend approximately $4,000/ year on just 1^st class mail notifications. If in addition, the state of California were to adopt this as law the costs would climb to in excess of $30,000 per year. If that’s not unaffordable, factor in lost business resulting from customers declining to shop, out of concern for loss of privacy due to the third requirement of reporting their purchases to the state.

For 18 years the 1992 Supreme Court decision, Quill vs North Dakota, protected out-of-state online retailers from having to collect state and local sales taxes. DMA was extremely influential in the outcome of this case and that influence was made possible by the support of its membership. By joining DMA and supporting its suit against the state of Colorado you will be supporting the victory over this unnecessary legislation. Otherwise, our businesses will certainly face further regulatory intrusion that is sure to hamper commerce at a time when businesses are facing an economic downturn not seen since the Great Depression.

Your funding provides the resources DMA needs to oppose this law, but it is your membership that provides DMA with the strength to utilize those resources. Join DMA and its members and take an active role in supporting your own business and the opposition of the Colorado Tax Reporting Law.

To learn more about this issue and how you can support DMA’s efforts click here!

Thank You,

Neil O'Keefe
V.P. Multichannel Segments
Direct Marketing Association

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