CRS – “Amazon” Laws and Taxation of Internet Sales: Constitutional Analysis, Erika K. Lunder – Legislative Attorney; John R. Luckey – Legislative Attorney, July 26, 2012
sales, the reality is that they may impose sales and use taxes on such transactions, even when the retailer is outside of the state. However, if the seller does not have a constitutionally sufficient connection (nexus) to the state, then the seller is under no enforceable obligation to collect a use tax. While the purchaser is still generally responsible for paying the use tax, the rate of compliance is low. Recent laws, often called Amazon laws in reference to the large Internet retailer, represent fresh attempts by the states to capture taxes on Internet sales. States enacting these laws have used two basic approaches. The first is to impose use tax collection responsibilities on retailers who compensate state residents for placing links on the state residents websites to the retailers website (i.e., online referrals or click-throughs). The other is to require remote sellers to provide sales and tax-related information to the state and/or the in-state customers. New York was the first state to enact click-through legislation, and Colorado was the first to pass a notification law. These laws have received significant publicity, in part due to questions about whether they impermissibly impose duties on remote sellers who do not have a sufficient nexus to the state.”
