Tenth Circuit resurrects Colorado's Amazon law


The Tenth Circuit Court of Appeals recently dismissed a lower court’s permanent injunction that had enjoined Colorado from enforcing its Amazon law requiring remote sellers to report sales in the state. The Tenth Circuit held that the Tax Injunction Act (TIA) precludes federal jurisdiction over the claim that Colorado’s law requiring out-of-state retailers to report information about customers’ purchases to each customer and to the Colorado Department of Revenue (DOR) violates the Commerce Clause of the U.S. Constitution (Direct Marketing Ass’n v. Brohl, No. 12-1175 (10th Cir. 8/20/13)).

As a result, the Tenth Circuit remanded the case to the district court to dismiss the Commerce Clause claims and lift the permanent injunction the lower court had imposed prohibiting the DOR from enforcing the law (Direct Marketing Ass’n v. Huber, No. 1:10-CV-01546-REB-CBS (D. Colo. 3/30/12)). Any further proceedings in the case must begin in Colorado’s courts or administrative agencies.


The Colorado law (Colo. Rev. Stat. §39-21-112(3.5)) and related regulations require any retailer that sells $100,000 or more of products to customers in Colorado, but does not collect and remit sales taxes on those products, to:

  • Notify the purchaser that the retailer does not collect Colorado sales tax and that the purchaser is therefore obligated to self-report and pay use tax.
  • Send each customer who purchases more than $500/year of products from the retailer an annual report of the prior calendar year’s purchases and inform the customer that the retailer is required to file an annual purchase summary reporting the customer’s name and total purchases to the DOR.
  • Provide the DOR with an annual customer information report stating the name, billing and shipping address, and total purchases for each of its Colorado customers.

Retailers can avoid the reporting requirements by voluntarily collecting tax from customers in Colorado.

The lower court had found that the law violated the “dormant Commerce Clause” (the constitutional theory that prohibits state actions that interfere with interstate commerce) because it discriminates against out-of-state retailers by treating them differently from in-state retailers and was therefore invalid on its face. That court further held that the DOR had failed to overcome this finding of facial invalidity because it failed to prove that the law advances a legitimate local purpose that could not be served by “reasonable nondiscriminatory alternatives.”

The TIA states that “district courts shall not enjoin, suspend or restrain the assessment, levy or collection of any tax under State law where a plain, speedy and efficient remedy may be had in the courts of such State” (28 U.S.C. §1341). The Tenth Circuit characterized this as a broad jurisdictional barrier that prevents federal courts from interfering with the important state concern of collecting taxes.

For a detailed discussion of the issues in this area, see “Use Tax Reporting: Is Colorado Back in Business?” by Sarah McGahan, J.D.,  in the December 2013 issue of The Tax Adviser.

Alistair M. Nevius, editor-in-chief
The Tax Adviser

Also look for articles on the following topics in the December 2013 issue of The Tax Adviser:

  • A discussion of tax issues for creators of intellectual property.
  • An update on employee benefits and compensation issues.
  • An analysis of the five-year built-in gain recognition period.


Implementing a global statutory reporting maturity model

Assess your organization's capabilities and progress toward an ideal state of global statutory reporting. Sponsored by Workiva.


Black CPA Centennial, 1921–2021

With 2021 marking the 100th anniversary of the first Black licensed CPA in the United States, a yearlong campaign kicked off to recognize the nation’s Black CPAs and encourage greater progress in diversity, inclusion, and equity in the CPA profession.