Colorado passed a sales tax initiative which specifically was aimed at and specifically was targeting Amazon. Amazon has become one of the largest online retailers generating billions in sales and bringing the online retailer into view by states looking to increase their shrinking tax base. What the tax proposals are looking at from states like California, Illinois, Iowa, Maryland, New Mexico, Vermont, and Virginia currently have laws similar to what Colorado has already passed. The basic premise is that companies like Amazon, Overstock, Blue Nile and others have an unfair advantage over other retailers.

So here is how the game has been working. The U.S. Supreme Court ruled back in 1992 that online retailers can not be forced to collect out of state sales tax. The exception is when the company has a physical presence in the state where the order is placed. With that the state of Colorado passed their sales tax initiative with the premise that since Amazon has affiliates in the state, Amazon must pay sales tax. Amazon subsequently ended their affiliate program in Colorado.

This is what happened to one such affliate:

Jeremy Bray received an e-mail message this morning with an unwelcome surprise: told him it had canceled its affiliate program, which provides small payments for referring customers, for everyone in the state of Colorado.

Bray, a blogger who has lived in Pueblo, Colo., for more than 20 years, told CNET on Monday that he’s now trying to “bring as much attention to the issue as possible in hopes of getting Colorado to repeal” the new law.

But will this attempt to tax online sales have any affect on us? I seriously doubt it will. Most of us who buy online do so to avoid taxes on high cost items like HDTV’s and the like.

What do you think?

Comments welcome.