The Performance Marketing Association (PMA) said on Monday that proposed advertising-tax legislation in Colorado was dead. Legislators changed a proposed law (HB 1193) to remove a provision that would have required online retailers and marketplaces with affiliates in the state to collect Colorado sales tax. The PMA said HB1193 would become a bill solely focused on collecting use tax, and nothing to do whatsoever with affiliates.

AuctionBytes has been covering the issue. In 2008, the State of New York passed a law requiring Internet retailers with affiliates residing in the state - such as Amazon and Overstock.com - to collect New York sales tax, stating that affiliates count as a physical presence. And other states have followed in an effort to raise revenue.

Sabrix has been following such legislation on its blog. The company provides transaction tax management for companies of all sizes to help them comply with sales tax, use tax, value-added tax (VAT), excise tax, and other international and industry-specific taxes and fees. In a recent blog post, it wrote about similar legislation introduced in Virginia and New Mexico.

A recent report from George Askew, an analyst with Stifel Nicolaus, said advertising tax had gained momentum in January. "We believe three states have active affiliate tax laws: New York, Rhode Island, and North Carolina. We expect four states may pass affiliate tax legislation in 1H10: Colorado, Mississippi, New Mexico, and Virginia (proposed legislation in Colorado, Mississippi, and Virginia explicitly references the Internet)."

In its blog post on Monday, the PMA called the victory in Colorado "an unbelievable outcome," and wrote, "This is 100 percent due to the efforts of the people of Colorado who showed up to testify Thursday night, who wrote letters, who stormed the capitol (politely), and who made phone calls and visits."