DENVER Republican legislators said Thursday they will try to repeal the states Amazon tax after a judge temporarily blocked it.
Gov. John Hickenlooper, meanwhile, said he thinks Internet retailers should pay the same taxes as local merchants.
U.S. District Judge Robert Blackburn ruled Wednesday that the state has to stop trying to force out-of-state businesses to collect sales taxes on Internet transactions.
The enforcement of a law that likely is unconstitutional, even if the goal of the law is important and legitimate, does not serve the public interest, Blackburn wrote.
The Direct Marketing Association sued the state after the Legislature passed the law last year. The case is not over, but Blackburn granted a preliminary injunction, saying the DMA has a good chance to win the lawsuit.
The tax set off an emotional partisan fight last year, when Democrats passed it.
House Republicans have questioned the constitutionality, and the rationale, of this online tax since it was introduced, said House Majority Leader Amy Stephens, R-Monument. We knew from the beginning that this tax placed an undue burden on businesses and consumers across Colorado, and the nation.
Last years bill made Colorado among a handful of states that attempted to collect sales taxes from Internet sellers.
The U.S. Supreme Court has a long-standing ban on sales taxes imposed on out-of-state businesses, but Colorado tried a creative way to force online retailers to either collect sales taxes or cope with a big paperwork burden.
Blackburn ruled that the paperwork requirements unfairly discriminate against out-of-state businesses, in violation of the U.S. Constitution. His ruling blocks the state law until a trial can be held.
Technically, anyone who buys something tax-free on the Internet owes use taxes to the state. The use tax matches the sales tax exactly at 2.9 percent. But very few people know about it or bother to send a check to the state government.
Last years law tried to force Internet businesses to tell their customers about the use tax and allow state auditors to see sales figures. Legislators had hoped that online businesses would have decided it was easier to simply collect sales taxes instead.
Stephens wants the Legislature to repeal last years law.
A full repeal of the Amazon tax is still necessary, Stephens said. This court ruling is just one step in the long process of repealing this unconstitutional tax.
She has talked to Hickenlooper, who hasnt decided whether he will support her effort. But the governor said the current situation of tax-free Internet sales isnt fair to local businesses.
They should all pay taxes, Hickenlooper said. Is it fair that our local bookstores are being beat up with all these sales over the Internet?
He thinks the federal government might have to come up with a fair solution.
Im not saying we should tax the Internet. Im just saying that we need a level playing field, Hickenlooper said.
Andrea Avantaggio, co-owner of Marias Bookshop in Durango, said she was disappointed in the courts ruling.
I cant understand, when state coffers are empty, why its such an unacceptable thing to pay sales taxes, Avantaggio said.
She also doesnt buy the argument of Amazon.com and other big Internet retailers that it is too complicated to collect sales taxes for different states.
If you said that as an individual I cant figure out how to pay my income tax; its just too expensive it wouldnt fly, Avantaggio said.
The Amazon tax was one of 11 controversial tax bills that Democrats passed last year.
Senate Republicans have introduced bills to repeal all of them, but they stand little chance in that chamber.
House Republicans have introduced a bill to repeal just one of the tax laws, on agricultural inputs such as pesticides.