Featured, Gold Dome, Politics, Sherrie Peif, Taxes

Bill that would change online sales tax collections clears committee

DENVER — In an unusual twist, Democrats on the Senate Finance Committee voted against their usual privacy protection platform.

Sen. Andy Kerr, (D-Jefferson) and Sen Lois Court (D-Denver) on Tuesday were no votes on a bill that would protect online shoppers’ personal information. The measure, SB17-238, Notifications Regarding Online Purchases, passed 3-2 along a party line to advance out of committee.

The bill’s sponsor, Chris Holbert, (R-Douglas) said the bill fixes a security issue with HB10-1193, dubbed the “Amazon Tax,” which goes into effect July 1 after years in court over its constitutionality.

That bill requires online retailers who do not collect Colorado sales tax provide the Department of Revenue with a list of customers who made purchases on which tax was not collected. It also requires retailers to notify purchasers of their state use tax obligation by email rather than first class mail.

Senate Bill 238 repeals both requirements.

Holbert testified that his bill prevents the state from acquiring information about consumers that standard brick and mortar retailers do not have to report, such as names, addresses, phone numbers and buying trends.

It protects consumers from possibly embarrassing situations if others in the house open the mail; it treats all businesses fairly; and it educates people about Colorado’s use tax laws, according to Holbert.

Holbert pointed out that a saddle, for instance, bought by crossing state lines at a business in Cheyenne, doesn’t have the same compliance requirements as the online retailer under the current law, nor do businesses whose annual sales don’t reach $100,000 to Colorado consumers or people who purchase more than $500 worth of goods.

“I think that’s interesting,” Holbert said. “Because, apparently, if you do purchase less than $500 per year with one retailer, or that retailer does less than $100,000 a year in business then we still trust people. But if it’s more than those thresholds then the 4th Amendment of the constitution is just thrown out the window because the state of Colorado is going to subject people to an unreasonable search. You would still be free to shop online in Colorado, but you would no longer be free to do that with liberty because the heavy boot of government is stepping into your life.”

Most who testified for the bill were in support. Kerr and Court questioned their integrity and at times were harsh with the witnesses and Holbert.

Patti Kurgan with Americans for Prosperity said the bill as it is written links the Department of Revenue to online retailers and specific online customers.

“This is a privacy issue and will reveal information that does not concern the state,” Kurgan said. “It can bring embarrassment or harm if this information is leaked to third parties. The state will expose shopping habits of its citizens and can make assumptions, not all accurate, on someone’s sexuality, political leanings, their guns, health, and financial circumstances.”

Mike Krause, from the Independence Institute*, a free-market think tank based in Denver, said the privacy concerns are very real, and that the 2010 law seemed to have been written entirely for the convenience of the government, at the expense of individual privacy.

“Part of the job of the legislature is that you often have to find a balance between the needs of enforcing the law and securing the rights and liberties of the citizenry,” Krause said.

Krause said this bill does that by having companies email consumers about their yearly purchases and reminding them that they must pay Colorado taxes on them without exposing their online shopping to the state.

“I’d be shocked if compliance wasn’t raised once people started receiving notices,” Krause said.

Kerr challenged Krause, Kurgan and another witness in favor of the bill about their concern over protecting the privacy of others by attempting to bring national politics into the debate.

“I was wondering if each of the three witnesses could describe any lobbying effort your organizations have done with congress over the past few weeks specifically with the bill the president signed yesterday that really throws privacy out the window.”

Republican Sen. Tim Neville, who represents parts of Denver, Gilpen. Jefferson and Boulder counties and is the chairman of the finance committee, quickly reminded Kerr to stick to the bill; however, all three responded with efforts their organizations had taken concerning other privacy concerns.

Court was clear that she absolutely does not like the bill or online shopping and would not support any version because it hurts local businesses.

“I represent a lot of small businesses, and they are getting killed by internet sales” Court said. “They testify frequently on these types of things, but they are not here today, and I’m not sure why.”

She told the room she was so passionately against it, she threatened to divorce her husband over it.

“Making it easier for people to circumvent their local businesses to go online is not what I want to do,” Court said. “I don’t want to make it easier for people to not go to their bricks and mortar store. My husband was an Amazon addict, and when I found out that he had never been paying use tax on the purchases he was making on the internet, I went home — we had been married 36-37 years — and I told him, ‘you’ve got a choice; we can stay married, or you can (keep) shopping on Amazon because your screwing our sales taxes and you’re hurting our local businesses.’ We’ll be celebrating our 43rd Anniversary this year, so he made the right decision.”

Sen. Owen Hill, (R-El Paso) said he sees it differently. If the legislature were to run a bill that required brick and mortar businesses to collect the same data and file the same reports the current bill requires of online retailers there would be an outcry.

“Maybe there are some legitimate concerns about collections and the implications this has,” Hill said. “But if it costs our government $4.7 million to not collect all of your online sales, I think that’s a tiny price to pay.”

The bill is now headed to appropriations.

* Complete Colorado is a project of the Independence Institute.

 

 

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