As part of the growth of sales taxing of online purchases, and some oddities around SCOTUS rulings, states that are collecting sales taxes from online vendors will now not only get the taxes levied, but a line item list of what it was you bought, so that the state governments can verify the taxes remitted are on the up and up.
So, yeah, that vibrator, or that copy of the Koran, or that book on how to cheat on your spouse, or that video that the current party in power was so outraged about, or that porno DVD, or pretty much anything you buy from Amazon, eBay, or any other online vendor, will all be in a state government database, just waiting for some bureaucrat or law enforcement officer to decide to data mine for some more interesting purpose (or for some hacker to break into it for ditto).
I suspect this will get litigated pretty quickly, because the room for abuse here is nightmarish.
If you bought a dildo in Denver, the government must legally be told
Or smut in South Dakota, Anarchist Cookbook in Alabama or Windows 10 in Wyoming
This article does not match my reading of the law, and I think we're receiving a particularly biased spin specifically from the retail industry
The salient parts of the law read as follows:
39-21-112 (1) "For the purpose of ascertaining the correctness of any return or for the purpose of making an estimate of the tax due from any taxpayer, the executive director has the power to examine or cause to be examined by any employee, agent, or representative designated by him or her for that purpose any books, papers, records, or memoranda bearing upon the matters required to be included in the return."
This is essentially legal authorization to perform taxpayer audits. From this, as with any tax authority, the Colorado department of revenue can demand that a taxpayer produce documentation to support their tax returns. That documentation may include individual receipts, but this has always been the case.
39-21-112 (2) Describes power to subpoena and hold in contempt the taxpayer.
39-21-112 (3) Describes power to subpoena and hold in contempt other persons who might provide similar supporting evidence.
39-21-112 (3.5)(a) "If any retailer that does not collect Colorado sales tax refuses voluntarily to furnish any of the information specified in subsection (1) of this section when requested by the executive director of the department of revenue or his or her employee, agent, or representative, the executive director, by subpoena issued under the executive director's hand, may require the attendance of the retailer and the production by him or her of any of the foregoing information in the retailer's possession and may administer an oath to him or her and take his or her testimony. If the retailer fails or refuses to respond to said subpoena and give testimony, the executive director may apply to any judge of the district court of the state of Colorado to enforce such subpoena by any appropriate order, including, if appropriate, an attachment against the retailer as for contempt, and upon hearing, said judge has, for the purpose of enforcing obedience to the requirements of said subpoena, power to make such order as, in his or her discretion, he or she deems consistent with the law for punishment of contempts."
Here, if the taxpayer fails to provide documentation in the course of an audit, the state may demand such documentation from the retailer. Again, this may include receipts; again, this has always been the case.
39-21-112 (3.5)(b) Defines "retail."
39-21-112 (3.5)(c)(I) "Each retailer that does not collect Colorado sales tax shall notify Colorado purchasers that sales or use tax is due on certain purchases made from the retailer and that the state of Colorado requires the purchaser to file a sales or use tax return."
This requires that retailers from whom Colorado residents make purchases send those residents a sales tax notice.
39-21-112 (3.5)(c)(II) Describes penalties for retailers' failure to comply.
39-21-112 (3.5)(d)(I)(A) "Each retailer that does not collect Colorado sales tax shall send notification to all Colorado purchasers by January 31 of each year showing such information as the Colorado department of revenue shall require by rule and the total amount paid by the purchaser for Colorado purchases made from the retailer in the previous calendar year. Such notification shall include, if available, the dates of purchases, the amounts of each purchase, and the category of the purchase, including, if known by the retailer, whether the purchase is exempt or not exempt from taxation. The notification shall state that the state of Colorado requires a sales or use tax return to be filed and sales or use tax paid on certain Colorado purchases made by the purchaser from the retailer.
We're getting into the meat of it here, finally taking about what information retailers deliver – to the customer, in this case – specifically, limited to dates, amounts, and category but not line items purchased. This is, in effect, a statement of sales tax owed.
39-21-112 (3.5)(d)(I)(B) Describes how the notification must be delivered and labeled.
39-21-112 (3.5)(d)(II)(A) "Each retailer that does not collect Colorado sales tax shall file an annual statement for each purchaser to the department of revenue on such forms as are provided or approved by the department showing the total amount paid for Colorado purchases of such purchasers during the preceding calendar year or any portion thereof, and such annual statement shall be filed on or before March 1 of each year."
39-21-112 (3.5)(d)(II)(B) Describes conditions for magnetic or other machine filing.
39-21-112 (3.5)(d)(III)(A & B) Describes penalties to retailers for failure to file.
39-21-112 (4) Describes effective date.
39-21-112 (5) Describes authority to appoint and delegate.
39-21-112 (6) Describes member bonds.
39-21-112 (7)(a)(I thru IX) Describes grounds for employee dismissal.
39-21-112 (7)(b) Describes criminal penalties for (7)(a) infractions.
39-21-112 (8) Describes authorization to waive penalties or interest assessed taxes.
39-21-112 (9) Describes additional powers of the executive director.
In summary, the only points at which buyers' individual purchase line items are exposed to the state are in the course of an audit and only if no other documents are sufficient to support the contents of the buyers' tax returns. Perhaps as important, this isn't new: audits have always exposed fine details of taxpayer finances.
So why the fuss about privacy if the law doesn't really effect privacy? Why does this article exist at all? The fact that the only "experts" quoted in the article are Steve DelBianco, Executive Director of "NetChoice – a trade association of e-commerce businesses that includes eBay, PayPal, Google and Facebook" and Hamilton Davison, "exec director of the American Catalog Mailers Association" seems telling. They represent online retailers who don't want to meet the same fiduciary and tax requirements that local retailers must, they represent online retailers who don't pay their own share of taxes to support the societies from which they draw profit and sustenance, they represent online retailers who confuse tax evasion with innovation and distribution.
Friends, we've been played. We've been manipulated by megacorporations in the hopes that we will raise a hue and cry, raise pitchforks and torches to advocate for corporate tax evasion.
Shame on them.
+Michael Verona Having dug further into it (the actual statutes, as you quote them, can be found at http://codes.findlaw.com/co/title-39-taxation/co-rev-st-sect-39-21-112.html), and looking at the info on the case (http://www.scotusblog.com/case-files/cases/direct-marketing-association-v-brohl/), I believe your information on the statute is correct.
I'm not convinced that this is good policy (though Use Tax is part of Colorado's law, as it is for most states), but the DMA's suggestions, as turned into the article I linked to, don't seem to be substantiated. And, yes, this does appear to be an effort by the DMA, et al., to exaggerate the law's impact.
One could be concerned over whether a summary by category — since the categorization is not specified — could betray private information. Indeed, simple use of some vendors, even without line items, could be used inappropriately ("PAY IS $5000 OR YOUR WIFE SEES YOU BOUGHT $2000 OF 'MEDIA MATERIALS' FROM HOTRUSSIANCHIX.COM" or "Yes, ma'am, we've pulled that list of all people buying materials from the Free Palestine Action Committee, and we'll pass that on to the requesters at the Bureau."). That's probably less a concern than line items, but it's still an area that deserves some discussion.
(The SCOTUS case was not about the law itself or its privacy implications, but about the arcanities of whether federal courts can interfere with state tax laws. The DMA's own amicus brief mentions privacy in passing, but offers no arguments about it, nor do I see any indication that the case was argued around the privacy merits, because that's not what it was about.)
+Dave Hill – Excellent points about categorization and the delivery of vendor information, and thanks for the link to the statutes – I used the Colorado LexisNexis site and I should have linked it.
As I see it, the delivery of information is an existing risk; inevitably, it is already present on the client-side. An obvious risk with categorization is that without explicit requirements, vendors might default to delivering line-item lists or duplicate receipts just because they already have them and is easy.
Ultimately, I keep coming back to two things:
• Taxes are necessary to cover the costs of public services and the system can't work unless everyone pays their share,
• and vendors, regardless of location, are best positioned to process the receipt of sales taxes, much the way employers shoulder the burden of managing employee income withholding; convoluted systems of message passing are inefficient.
+Michael Verona Good note re "Since there are no mandated categories, why make them up, here's a list of line items" as another risk.
I concur in principle on taxes (the cost of civilization). Sales and use taxes have theri own cost and benefit here, but I agree that vendors are best placed to provide information on use taxes, as voluntary payment of them is generally dodgy (in all senses).