Direct Marketing Association, The v. Huber

Filing 50

RESPONSE to 15 MOTION for Preliminary Injunction with Incorporated Memorandum of Law filed by Defendant Roxy Huber. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4, # 5 Exhibit 5, # 6 Exhibit 6, # 7 Exhibit 7, Part 1, # 8 Exhibit 7, Part 2, # 9 Exhibit 7, Part 3, # 10 Exhibit 7, Part 4, # 11 Exhibit 7, Part 5, # 12 Exhibit 7, Part 6, # 13 Exhibit 7, Part 7, # 14 Exhibit 8, # 15 Exhibit 9, # 16 Exhibit 10, # 17 Exhibit 11, # 18 Exhibit 12, # 19 Exhibit 13, # 20 Exhibit 14, # 21 Exhibit 15, # 22 Exhibit 16, # 23 Exhibit 17)(Scoville, Stephanie)

REGULATION 39-21-112.3.5
1)

Definitions
a)

“Retailer that does not collect Colorado sales tax”
i)

ii)

A “retailer that does not collect Colorado sales tax” does not include a retailer
that makes sales in Colorado solely by means of download of digital goods or
software. A “retailer that does not collect Colorado sales tax” does include a
retailer that makes sales in Colorado both by means of download of digital goods
or software and by means of shipping or otherwise physically delivering goods to
a Colorado purchaser.

iii)

b)

A retailer that does not collect Colorado sales tax is a retailer that sells goods to
Colorado purchasers and that does not collect Colorado sales or use tax. Such
retailers are also referred to in this regulation as “non-collecting retailers”.

A “retailer that does not collect Colorado sales tax” does not include a retailer
whose sales in Colorado are de minimis. For purposes of this regulation, the
Department will presume that a retailer that makes less than $100,000 in total
gross sales in Colorado in the prior calendar year and reasonably expects total
gross sales in Colorado in the current calendar year will be less than $100,000 is
a retailer whose sales in Colorado are de minimis.

“Colorado purchaser”
i)

With respect to sales of goods that are shipped, a Colorado purchaser is a
purchaser that requests the goods be shipped to Colorado. In the case of a
purchase that is purchased by one party, who may be inside or outside of
Colorado, and shipped to a party in Colorado, the Colorado purchaser is the
purchaser of the goods, not the recipient of the goods.

ii)

With respect to sales of goods that are downloaded or otherwise delivered
electronically
(1)
(2)

c)

If the purchaser provides a “bill to” address, then a Colorado purchaser is
a purchaser whose “bill to” address is in Colorado;
If the purchaser does not provide a “bill to” address, then the noncollecting retailer shall make a determination as to whether a purchaser
is in Colorado, and is therefore a Colorado purchaser, using any other
commercially reasonable method based on the business’s existing
billing, customer-tracking, or other systems.

“Colorado purchase”
i)

With respect to sales of goods that are shipped, a Colorado purchase is one that
is shipped to Colorado.

ii)

With respect to sales of goods that are downloaded or otherwise delivered
electronically
(1)

If the purchaser provides a “bill to” address, then a Colorado purchase is
one for which the “bill to” address is in Colorado;

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(2)

iii)

If the purchaser does not provide a “bill to” address, then the noncollecting retailer shall make a determination as to whether a purchase is
a Colorado purchase using any other commercially reasonable method
based on the business’s existing billing, customer-tracking, or other
systems.

A Colorado purchase shall not include any purchases or rentals of VHS tapes,
DVDs, Blu-Ray disks, or other video materials to the extent that disclosure of the
purchasers of such items would violate 18 U.S.C. 2710.

d)
e)

2)

“Department” – the term Department refers to the Colorado Department of Revenue.
“Total gross sales” – As used in this regulation, the term total gross sales means the total
sales of goods. The term shall not include sales of services. The term shall include all
sales of goods made by all entities controlled by or under common control with the noncollecting retailer.

Obligation to give notice with each purchase
a)

A non-collecting retailer must give notice to all Colorado purchasers that Colorado sales
or use tax is due on all purchases that are not exempt from sales tax. This notice must be
provided with respect to each transaction.
i)

A non-collecting retailer may not display or imply that no tax is due on any
Colorado purchase, unless such a display is accompanied by the notice required
by this paragraph 2) each time the display appears.
(1)

(2)

ii)

Example: A summary of the transaction including a line designated
“Sales tax” and showing the amount of sales tax as “zero” or “0.00”
would constitute a “display” implying that no tax is due on the purchase.
Such a display must be accompanied by the notice required by this
paragraph 2) every time it appears.
Notwithstanding the limitation in this paragraph i), if a non-collecting
retailer knows that a purchase is exempt from Colorado tax pursuant to
Colorado law, the non-collecting retailer may display or indicate that no
sales tax is due even if such display is not accompanied by the notice
required by this paragraph 2).

In calculating the total price due to the retailer, a non-collecting retailer may
display a designation that no tax is being collected by the retailer or may entirely
omit any reference to sales tax. In this case, the notice required by this
paragraph 2) shall be sufficient if it appears on each invoice or, if no invoice is
provided, if it is otherwise given to the purchaser as part of the sale, either
immediately before, as part of, or immediately after the sale.
(1)

b)

Example: A non-collecting retailer may display a summary of the
transaction with a line designated “Sales tax collected by [name of
retailer]” and showing the amount collected as “zero” or “0.00” or any
other designation indicating that no sales tax is being collected. In this
case, the non-collecting retailer may provide the required notice only on
the invoice or immediately before, as part of, or immediately after the
sale.

The notice required by this paragraph 2) shall contain the following information:

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i)
ii)

The purchase is not exempt from Colorado sales or use tax merely because it is
made over the Internet or by other remote means;

iii)

c)

The non-collecting retailer does not collect Colorado sales or use tax;

The State of Colorado requires that a Colorado purchaser (A) file a sales or use
tax return at the end of the year reporting all of the taxable Colorado purchases
that were not taxed and (B) pay tax on those purchases;

The notice required by this paragraph 2) may contain the following additional information:
i)

The retailer will provide an end-of-year summary of Colorado purchases to the
customer in order to assist purchasers in filing their tax report;

ii)

Details of how and when to file this return may be found at the Colorado
Department of Revenue’s website, www.taxcolorado.com. The notice may
substitute a more specific url when such more specific url is published by the
Department;

iii)

The retailer is required by law to provide the Colorado Department of Revenue
with an annual report of the total dollar amount of all of a Colorado purchaser’s
Colorado purchases at the end of the year. The retailer will not provide any other
details of the transaction to the Department other than the amount of the
purchase.

d)

This notice must be clearly legible, reasonably prominent, and located in close proximity
to the total price. It shall be sufficient if the non-collecting retailer provides a prominent
linking notice that reads as follows: “See important sales tax information regarding the tax
you may owe directly to your state”, if such linking notice directs the Colorado purchaser
to the principal notice required by this paragraph 2).

e)

If the retailer is required to provide a similar notice for another state in addition to
Colorado, and the retailer provides a single such notice to all purchasers with respect to
items purchased for delivery in all states, the notice required by this paragraph 2) shall be
sufficient if it contains substantially the information required in a form that is generalized
to any state.

f)

Penalties –
i)

The non-collecting retailer shall pay a penalty of $5 for each sale to a Colorado
purchaser with respect to which the notice required by this paragraph 2) does not
appear.

ii)

The penalty assessed against a single non-collecting retailer in a single year
pursuant to this section shall not exceed the following amounts:
(1)

For a non-collecting retailer that had no actual knowledge of the
requirement and began to provide the required notices within 60 days of
demand by the Department, $5,000;

(2)

For a non-collecting retailer that failed to provide the notices for the first
calendar year for which the non-collecting retailer was obligated to
provide the notices, $50,000;

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(3)

iii)
3)

For a non-collecting retailer that sells only goods that are not taxable in
Colorado or sells goods only to purchasers that are not subject to sales
or use tax, no penalty shall be collected.

The Executive Director of the Department may waive all or any portion of the
penalty for other reasonable cause shown.

Obligation to give Colorado purchasers notice of Colorado purchases
a)

A non-collecting retailer must give an annual notice to all Colorado purchasers
summarizing the Colorado purchaser’s Colorado purchases for the preceding calendar
year. The notice shall meet the following requirements:
i)

The notice must be sent by first class mail to the last known address of the
purchaser as described in paragraph vii) of this paragraph a). The envelope
containing the notice must be prominently marked with the words “Important tax
document enclosed”;

ii)

The notice must summarize the date(s) of purchase(s), a description of the type
of item(s) purchased (e.g., books, food, consumer electronics, household
appliances), and the dollar amount(s) of the purchase(s);

iii)

The notice must also state that the State of Colorado requires that the consumer
file a sales or use tax return at the end of every year and pay tax on all taxable
Colorado purchases for which no tax has been collected by the retailer. The
notice may state that details of these requirements, including how to file, may be
found at the Colorado Department of Revenue’s website, www.taxcolorado.com.
The notice may substitute a more specific url when such more specific url is
published by the Department;

iv)

The notice must also indicate that the non-collecting retailer is required by law to
provide the Colorado Department of Revenue with the total dollar amount of
purchases made by the Colorado purchaser, however no information about the
purchase other than the dollar amount of the purchase will be provided to the
Department;

v)

If known to the non-collecting retailer, the notice may also indicate whether an
item is exempt from Colorado sales tax; however no non-collecting retailer is
required to include such information;

vi)

The notice must be sent by January 31st of each year summarizing purchases
made for the prior calendar year.

vii)

Last known address of the purchaser:
(1)

The non-collecting retailer may maintain a notice address for the
purchaser, in which case, the non-collecting retailer may send the notice
required by this paragraph 3) to such notice address if the following
conditions are met:
(a)

The non-collecting retailer informs the purchaser that the noncollecting retailer will be providing an end of year notice to the
taxpayer as described in this paragraph 3);

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(b)

The non-collecting retailer informs the purchaser that the
purchaser may choose to have the notice required by this
paragraph 3) sent to a different address than the billing address
(a “notice address”);

(c)

The purchaser acknowledges that he or she understands the tax
obligation described in the notice and wishes to have the notice
sent to a different address than the billing address and provides
such a notice address.

(2)

If the above conditions have not been met and no billing address for the
customer has been provided, then the non-collecting retailer shall send
the notice required by this paragraph 3) to the purchaser’s shipping
address.

(3)

If no billing address and no shipping address for the customer has been
provided and no other physical address for the purchaser is known using
any other commercially reasonable method based on the business’s
existing billing, customer-tracking or other systems, then the noncollecting retailer shall send the notice required by this paragraph 3) to
the most recent e-mail address the non-collecting retailer has for the
purchaser.

b)

If the retailer is required by another state to provide a similar notice, and the retailer
provides a single such notice to all purchasers with respect to items purchased for
delivery in all states, the notice required in subparagraph a) shall be sufficient if it
contains substantially the information required in a form that is generalized to any state.

c)

De minimis Colorado purchaser –
i)

ii)

If the goods purchased are not subject to Colorado use tax, a non-collecting
retailer may choose to exclude such purchases from the calculation in paragraph
i) of this paragraph c), however, no non-collecting retailer is obligated to do so;

iii)

d)

Any non-collecting retailer that is required to send the notice required by this
paragraph 3) to Colorado purchasers and that has complied with paragraph iii) of
this paragraph c), is not required to send the notice required by this paragraph 3)
to any Colorado purchaser whose total Colorado purchases for the prior calendar
year are less than $500;

Any non-collecting retailer wishing to take advantage of the limitation in
paragraph i) of this paragraph c) must make commercially reasonable business
efforts, based on the business’s existing billing, customer-tracking, or other
systems, to identify multiple purchases made by a single Colorado purchaser.

Penalties
i)

The non-collecting retailer shall pay a penalty of $10 for each notice required by
this paragraph 3) that is not sent by the non-collecting retailer to the Colorado
purchaser.

ii)

The penalty assessed against a single non-collecting retailer pursuant to this
section shall not exceed the following amounts:

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(1)
(2)

For a non-collecting retailer that failed to send the notices for the first
calendar year for which the non-collecting retailer was obligated to send
the notices, $100,000;

(4)

4)

For a non-collecting retailer that had no actual knowledge of the
requirement and sent the notices within 60 days after demand by the
Department of Revenue to issue such notices, $10,000;

(3)

iii)

For a non-collecting retailer that sent the notices within 30 days after the
due date, $1,000;

For a non-collecting retailer that sells only goods that are not taxable in
Colorado or sells goods only to purchasers that are not subject to sales
or use tax, no penalty shall be collected.

The Executive Director of the Department may waive all or any portion of the
penalty for other reasonable cause shown.

Obligation to give the Department notice of purchases made by Colorado purchasers
a)

Any non-collecting retailer who is required to provide a notice described in paragraph 3)
must file a report with the Department containing the following information:
i)

The name of each Colorado purchaser;

ii)

The billing address of each Colorado purchaser, if the information was provided
to the non-collecting retailer;

iii)

The shipping address of each Colorado purchaser, if the information was
provided to the non-collecting retailer;

iv)

The total dollar amount of Colorado purchases made by each Colorado
purchaser during the prior calendar year. No other information about the
purchase shall be provided.

b)

If the non-collecting retailer has more than one Colorado billing address or more than one
Colorado shipping address for a Colorado purchaser, then the non-collecting retailer shall
provide all such addresses of the Colorado purchaser.

c)

If the non-collecting retailer made more than $100,000 worth of total gross sales in
Colorado during the prior calendar year, the non-collecting retailer shall electronically
send the data required by this paragraph 4). If the non-collecting retailer made less than
$100,000 worth of sales in Colorado during the prior calendar year, the non-collecting
retailer may electronically send the data required by this paragraph 4). The Department
of Revenue shall publish on its website by November 1st of each year the required format
and data elements of the report and shall publish details of how the report file is to be
transmitted to the Department.

d)

Any non-collecting retailer that is not required to send any notices pursuant to paragraph
3) of this rule is also exempt from the requirements to send the report described in this
paragraph 4).

e)

If a non-collecting retailer is required to provide any notices pursuant to paragraph 3) of
this rule, then such non-collecting retailer must include all the purchases made by all

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Colorado purchasers in its report, including any purchases made by de minimis Colorado
purchasers.
f)

Penalties
i)

If a non-collecting retailer fails to file the report required by this paragraph (4), the
non-collecting retailer shall pay a penalty equal to $10 times the number of
Colorado purchasers that should have been included in the report.

ii)

The penalty assessed against a single non-collecting retailer in a single year
pursuant to this section shall not exceed the following amounts:
(1)
(2)

For a non-collecting retailer that had no actual knowledge of the
requirement and filed the report within 60 days of demand by the
Department that the report be filed, $10,000;

(3)

For a non-collecting retailer that failed to file the report for the first
calendar year for which the non-collecting retailer was obligated to file
the report, $100,000;

(4)

iii)

For a non-collecting retailer that filed the report within 30 days of the due
date, $1,000;

For a non-collecting retailer that sells only goods that are not taxable in
Colorado or sells goods only to purchasers that are not subject to sales
or use tax, no penalty shall be collected.

The Executive Director of the Department may waive all or any portion of the
penalty for other reasonable cause shown.

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