As we have written in several previous posts, Colorado enacted an onerous reporting requirement for those remote sellers that do not collect and remit the Colorado sales and use tax. The Colorado statute requires such remote sellers to provide three types of notices that they do not collect the Colorado sales and use tax, even though they do not have nexus with Colorado under the Quill standard. Brann & Isaacson, on behalf of the Direct Marketing Association, will be challenging the constitutionality of the statute in a suit to be filed shortly, because the Colorado statute applies to companies that lack nexus.
On June 9, Oklahoma enacted a “Colorado-like” statute, HB 2359, that requires that any retailer that sells tangible personal property to Oklahoma residents must “provide notification on its retail Internet web site or retail catalog and invoices provided to its customers that use tax is imposed and must be paid by the purchaser.” (emphasis added). The statute is Colorado-like in the sense that retailers without nexus are required to provide notice regarding the fact that sales and use tax is due on purchases, but it does not contain the Colorado provisions requiring retailers to provide annual notice (i) to purchasers of the volume of their purchases and that tax should be remitted to the Department of Revenue; and (ii) to the Department of Revenue of their Colorado purchasers and the volume of purchases made during the preceding year. Thus, the Oklahoma statute does not require annual notice to customers of their purchases in the preceding year or an annual report to the Oklahoma Tax Commission, the agency responsible for enforcing the sales tax law, of Oklahoma purchasers from the retailer.
Even the notice that is required under the Oklahoma statute is different than that required under the Colorado statute. The law requires notice on the “Internet web site or retail catalog and invoices provided to consumers.” The use of the word “or” in the statute indicates that a retailer has a choice. It can provide notice on its web site or it may insert notice in its retail catalog and any invoices provided to consumers. It is unclear whether that was the intent of the legislators when adopting the statute. But that is irrelevant, given the statutory interpretation principle that resort to legislative history is permitted only when a statute is ambiguous. There is no ambiguity in the statute. It clearly gives the retailer the choice. The statute did not use the conjunctive phrase “and” between “Internet web site” and “retail catalog and invoices.”
Even if notice is not provided on the web site, a good argument can be made that notice in the catalogs alone is sufficient if the retailer does not provide invoices. We know that many online sellers do not provide invoices. Again, the language of the statute provides for notice in the catalog “and invoices provided to its customers.” So, if a retailer does not provide invoices to customers, under the literal language of the statute the retailer would not be required to provide the notice.
It should also be noted that, although the statute is effective as of July 1, 2010, the notice provisions are not effective until the Oklahoma Tax Commission has adopted a rule implementing the statute. Thus, we will need to review the rule when adopted in order to assess the kind of notice that Oklahoma Tax Commission feels is required.