Efforts by Colorado to collect sales tax on Internet purchases have become very controversial – and the 800-pound Gorilla known as Amazon.com is fighting back.

In a story that ran on WebCPA, Editor-in-Chief Michael Cohn reports that Amazon.com cut off its affiliates in Colorado based on a new law requiring Web retailers to send a statement to their customers every year detailing the amount of tax they owe on purchases.

Amazon issued this statement via e-mail: “The regulations are burdensome and no other state has similar rules. The new regulations do not require online retailers to collect sales tax. Instead, they are clearly intended to increase the compliance burden to a point where online retailers will be induced to ‘voluntarily’ collect Colorado sales tax — a course we won’t take.”

According to the story, states like Colorado are making more of an effort to collect sales tax on online purchases to help make up for revenue shortfalls. Amazon also cut off ties with its affiliates in Rhode Island and North Carolina.
 
Colorado Governor Bill Ritter criticized Amazon’s decision: “Amazon has taken a disappointing — and completely unjustified — step of ending its relationship with associates. While Amazon is blaming a new state law for its action, the fact is that Amazon is simply trying to avoid compliance with Colorado law and is unfairly punishing Colorado businesses in the process.”