This Is a written counterpart to the InsideHandmade radio podcast and it not intended to be a transcript of the show.

In their March 11, 2010 edition of InsideHandmade, John and Tony covered three newsworthy topics affecting e-commerce and social networking on the web, the first of which was Colorado’s newly passed legislation that affects large e-commerce sites. Like many states, Colorado has a budget deficit to fill. Lawmakers in Colorado passed HB 10-1193 in an attempt to increase revenues by requiring large e commerce sites to track sales made to Colorado residents and report that data to the state. These types of cumbersome regulations increase the likely hood that e-commerce sites selling to residents in Colorado will go ahead and collect a Colorado sales tax for the state rather than have to track and report every sale.

We’ve seen a trend recently where large multi-national companies have increasingly been the target of state and national governments (an example would be Google vs. China). In this case, Amazon did not take the news of the passed legislation lying down. While the legislation that passed did not affect Amazon affiliates (who were the target of this bill in its original form), Amazon responded to the legislation by ending its relationships with affiliate partners located in Colorado. While this move may be seen as shrewd and unnecessary by some, it will likely serve the purpose of angering a large group of Colorado voters who will in turn voice their concerns about this turn of events to their state representatives.

The worrisome trend here is that many states are looking to fill budget gaps in the same matter as Colorado, and it is much easier to set a focus on an entity outside of your (the legislators) voting district than it is to cut programs or increase taxes in state. Large internet retailers can look like big juicy targets to cash strapped states, the problem is that large companies tend to be well versed in defending themselves, and moves like these will probably not have the beneficial results that the lawmakers envisioned when the bill was passed.