Colorado's Internet tax law scores win in federal appeals court

DENVER - Colorado's efforts to compel large online retailers to collect millions of dollars in state taxes on Internet sales scored a win Tuesday, although enforcement of the so-called Amazon tax law may be contingent on whether opponents continue their legal challenge.

In the latest development, a federal appeals court ruled that a lower court overstepped its jurisdiction in tossing out the law last year.

The law, passed in 2010, imposes extensive reporting requirements on e-tailers that don't collect Colorado's 2.9 percent use tax on purchases.

The law was intended to urge non-collecting retailers to start charging the tax.

Last year, a federal judge permanently blocked Colorado from enforcing the law because it placed an "undue burden on interstate commerce." The Direct Marketing Association, a business trade group, had argued that the reporting obligations under the law are unconstitutional.

The U.S. Court of Appeals for the 10th Circuit on Tuesday remanded the case to the district court to dismiss the DMA's claims and to lift the permanent injunction.

Read more about how much revenue Colorado's state and local governments are losing because of residents' failure to pay Internet sales tax at the Denver Post: