The Direct Marketing Association's petition for certiorari, filed on August 29th, 2016, sought a reversal of the February ruling by the U.S. Court of Appeals for the Tenth Circuit, which found constitutional Colorado's 2010 law imposing notice and reporting requirements on remote retailers that don't collect and remit sales and use taxes to the state.
The DMA argued Colorado's law violates the anti-discrimination doctrine of the dormant commerce clause by only requiring remote vendors to report consumer purchases to the state Department of Revenue and provide notice to purchasers of their obligation to pay Colorado's sales or use tax.
The U.S. Supreme Court failed to take-up the DMA case and states will now be unhindered in passing new laws that force online and catalog retailers to snitch personal information such as purchase data to state tax collecting authorities. That also means that any prospects for the court to reconsider its foundational physical presence standard for vendors to collect and remit state sales and use taxes are on hold, for now. The denial also means the Colorado reporting and notice requirement remains in full effect (Direct Mktg. Ass’n v Brohl, U.S., No. 16-267, cert. denied 12/12/16; Brohl v. Direct Mktg. Ass’n, U.S., No. 16-458, cert. denied 12/12/16 ). If those laws pass, the state governments will be able to request and receive data about resident’s online or catalog purchases.
That means state governments will receive data including resident’s personal health products and politically-themed books and movies. With this data, it will be very easy to draw conclusions about the personal life or personal private opinions, perspectives or points of view.
Christopher Oswald, the DMA’s vice president for state affairs, said the group filed the case to protect private sales transaction information.
“Private sales transaction information, including the items a customer ordered and how much they paid for them, should remain private. We know that both businesses and consumers would agree, which is why DMA and its members remain committed to challenging this law,” he said.
The original challenge in the case arose to Colorado House Bill 10-1193 in 2010.
The bill imposed three very distinct reporting requirements on out-of-state retailers that make sales into the state:
• These retailers must inform purchasers at the time of the sale that a use tax may be due and that Colorado requires them to file sales and use tax returns and pay use taxes directly to the state.
• By Jan. 31 of each year, these retailers must provide each Colorado purchaser with a reminder of the use tax and provide the dates, amounts, and categories of each purchase, if available.
• These retailers must file annual reports with the Colorado Department of Revenue by March 1 that includes, on a purchaser-by-purchaser basis, the total amount paid for Colorado purchases in the prior year.
But if the states would really implement these laws it would not only be a massive attack on the privacy of Americans but it would also institute regulation without representation.
Online retailers selling products to customers in Colorado will have to report back directly to Colorado's department of revenue with Coloradans purchasing information. If they don't, they will face legal action. This is an overly burdensome cost of doing business with residents of the state of Colorado.
But really, the most galling thing about this law is that Colorado's IRS is looking for, and testing the waters on new ways to spy on its citizens.
Photo credit: Flickr