Sales Tax & Compliance brought to you by >> Avalara Logo new12

Estimated reading time: 2 minutes, 51 seconds

Andrew Johnson, Peisner JohnsonStates are looking to Colorado law regarding use tax owed by out-of-state purchases as a lever to spur vendors to collect sales tax from online sales. Moreover, a panel at sales-and-use tax software vendor Avalara's recent Crush conference speculated Amazon's decision to collect sales tax in all states may have the same impact.

Colorado's requirement, which kicks in on July 1, requires vendors that sell at least $100,000 in the state to notify those out-of-state residents who purchase at least $500 a year that they must pay the state's use tax. The use tax rate of 2.9 percent is the same as its sales tax rate.

"I think this new approach has some legs," Andrew Johnson said during a panel discussion at the Avalara conference. Johnson is a founding partner of Peisner Johnson, a Dallas, Texas-based CPA firm that specializes in state tax consulting.

The Colorado law was enacted in 2010 but could not be put into effect until it survived court challenges. That happened in December when the Supreme Court declined to hear an appeal by direct marketers in which a lower court found the law constitutional.

Vermont has a similar requirement with a use tax rate of 6 percent that is the same as its sales tax levy. The state tied the effective date for collection to the outcome of the legal challenge to the Colorado law to it also goes into effect July 1.  Kentucky, Louisiana, Oklahoma and South Dakota have also enacted notification laws.

The Colorado law has teeth. It requires the vendors who meet sales thresholds to notify the consumers of their annual purchases and their obligation to pay the use tax. Those who fail to file the report can be fined $10 for each failure to file the annual report with the Colorado Department of Revenue at $5 for each failure to send notice to customers. Vermont has similar penalty requirements.

One trigger is expected to be vendor unwillingness to field the volume of calls from customers who receive such notices, combined with that $15 per customer charge. Johnson said the approach makes the seller "the bad guy" in the process.

"If I put this notice on my invoices, am I ready to take all these phone calls?" he continued. Most vendors, Johnson believes, will decide "I am going to start paying tax in Colorado and Vermont."

Now that the law is in effect, other states are eying the approach. Alabama, Arkansas, Hawaii, Pennsylvania and Washington are considering bills.

Johnson sees the Amazon decision, combined with proposed laws that would impact platform vendors such as eBay and Overstock, as tipping the merchant community toward collecting sales taxes. With Amazon collecting the taxes, "Everyone else is going to flip," he said.


Bob Scott
Bob Scott has provided information to the tax and accounting community since 1991, first as technology editor of Accounting Today, and from 1997 through 2009 as editor of its sister publication, Accounting Technology. He is known throughout the industry for his depth of knowledge and for his high journalistic standards.  Scott has made frequent appearances as a speaker, moderator and panelist and events serving tax and accounting professionals. He  has a strong background in computer journalism as an editor with two former trade publications, Computer+Software News and MIS Week and spent several years with weekly and daily newspapers in Morris County New Jersey prior to that.  A graduate of Indiana University with a degree in journalism, Bob is a native of Madison, Ind
Last modified on Monday, 05 February 2018
Read 2752 times
Rate this item
(0 votes)

Sales Tax Assessment Tool

The Accounting Top 100

Sales Tax Calculator

Social Leader board

The Accounting Top 100 social media leaderboard ranks accounting professionals based on their overall presence, influence, and engagement on social media platforms. Each user’s rank is determined by that user’s Klout Score in addition to a list of custom metrics, and all updated rankings are displayed in new leaderboards generated every two weeks.

Did you make the list?

Congratulations! You can now track your progress on the leaderboard by clicking “Follow us” at the top of the list. Want to get the word out about your new celebrity status? Share this page with all of your friends and followers so they can view and join in on this fun social activity.

Think you’ve got what it takes to make the Top 100?

Join for free today!


Avalara’s Accounting Top 100 leaderboard (the “Leaderboard”) is assembled using a list of accounting professional users that’s curated by manual entry as well as by Rise.Global's internal Twitter search functionality. We reserve the right to change scoring metrics used for ranking and to exclude anyone from the list, in our sole discretion. The Leaderboard is not an endorsement, recommendation or sponsorship of any of the accounting professionals on the Leaderboard, and we do not make any representation or guarantee of their ability or reliability. Assessments by different methods or based on different information may yield different results. The Leaderboard is only a starting point to gather information about accounting professionals, and you should not rely on it to decide whether to hire an accounting professional.

For feedback and/or questions please contact [email protected].

Visit other PMG Sites:

click me
PMG360 is committed to protecting the privacy of the personal data we collect from our subscribers/agents/customers/exhibitors and sponsors. On May 25th, the European's GDPR policy will be enforced. Nothing is changing about your current settings or how your information is processed, however, we have made a few changes. We have updated our Privacy Policy and Cookie Policy to make it easier for you to understand what information we collect, how and why we collect it.
Ok Decline