A federal district court judge just ruled Colorado’s Internet tax (nicknamed the “Amazon tax”) is an unconstitutional burden on interstate commerce.
That’s the good news.
The bad news is that Amazon and other big online retailers have been cooperating with efforts to pass a U.S. federal Internet sales tax supported by offline stores like Wal-Mart under the term “Main Street Fairness.”
Big retailers like Amazon have the infrastructure in place to collect and remit Internet sales taxes but it would be easier if they just paid the federal government instead of 50 states and thousands of cities.
Smaller online competition gets hurt because most business website owners will not have the ability to handle collection and remittance of sales tax to places beyond their home state or province.
On the bright side, maybe this finding that the Colorado Internet sales tax is unconstitutional will encourage Amazon to grow a pair and actually fight this issue up to the U.S. Supreme Court instead of cooperating to get a federal Internet sales tax in place.
To learn more about Internet taxes, check out Chapter 27 of my book on Internet Laws: How to Protect Your Business Website Without a Lawyer.