Promulgated on September 11, the Colorado Department of Revenue (DOR) released emergency tax collection regulations that create significant changes for all companies doing business into Colorado, both in-state and out-of-state.
The new regulations take effect December 1, 2018, and impose remote seller collection requirements on all business transactions where the seller has nexus in the State. Nexus is broadly defined by either physical presence, more than $100k in revenues or more than 200 individual transactions into the state.
This ruling effectively creates a destination sourcing requirement for sales tax and further imposes statewide local sales tax collection responsibility for any taxpayer with nexus in the state.
The emergency regs replace the system where vendors generally needed to have a physical presence in a location to collect the local taxes. The regs require sales tax to be collected across special districts, statutory cities, statutory counties and state collected home rule cities.
Reporting will need to be done for each “branch” individually. The DOR has not indicated how taxpayers will manage which branches their account may use. Taxpayers not already reporting by spreadsheet or “XML” will need to either put those systems in place or file paper returns for each branch separately. The new tax collection regs are expected to incrementally increase sales taxes to the extent vendors previously did not have a location or branch for reporting.
The takeaway
There’s a lot here to get ahead of for all companies doing business into Colorado. The DOR is scheduled to hold final rulemaking hearing on the proposed regulations on October 30, 2018 at the Department of Revenue, 1313 Sherman Street, Ste. 220, Denver. CO.
The final rulemaking is expected to put the onus on vendors to take on more rigorous eSales tax collection and reporting requirements, creating uncertainty as the regs rollout. Contact us to get started dealing with the change in these more aggressive sales tax tactics from the State.
Let’s talk tax
Judy Vorndran can be reached at jvorndran@taxops.com or 720.227.0093. Follow Judy on LinkedIn.
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We’re working for you to make Colorado more business-friendly. Read more at The fix is on: Simplifying Colorado Sales Tax enters active phase > and join the Simplify Colorado Sales Tax coalition. Learn more.
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