Colorado statewide sales tax system, a work in progress

by | Jul 31, 2020 | State and Local, Tax News

Colorado Statewide Sales Tax System, a Work in Progress

By Judy Vorndran 

The Colorado statewide sales tax calculation and remittance system is live and it’s a successful public private partnership that will benefit business taxpayers.

The Colorado Department of Revenue (CDOR) recently released a report on the NEW online Sales and Use Tax (SUTS) System. Stakeholders have been engaged throughout the process, from designing the functionality, through procurement, development and ongoing improvements.

The SUTS System allows businesses to go to a single website to find all sales and use tax rates associated with a specific destination and file a single remittance that goes to multiple jurisdictions. Licenses are required for each city, which can be input into the SUTS system if you already have them and saved for future use or added through the SUTS system if you don’t already have one.

Caution – be wary of prior nexus in a home rule before registering. Contact the SALTovation team at TaxOps if you have questions about those types of issues.

SUTS was exceptionally successful in every way. According to the report:

  • SUTS development was completed on May 6, 2020, seven weeks ahead of what was already an aggressive estimate of June 30, 2020.
  • The budget was $18,750,000 over fiscal years 2020 and 2021, but SUTS was completed at almost $6 million under budget for FY20 and $4.6 million under budget for FY21. About $10.6 million in savings (56.30% of the appropriation) was given back to the General Fund at a critical time given the overall budget shortfalls due to COVID-19.
  • Functionality exceeded the minimal viable product established at the start, allowing lookups of sales and use tax but also credits and exemptions with a robust remittance service.
  • Acceptance rate also exceeded expectations. The original requirement was for three of the 71 self-collecting-tax municipalities to voluntarily use the system upon launching online and to reach 100% engagement within three years. As of July 6, 2020, twelve (17%) have already signed on, 24% more are in the process of approval, and 48% more are in the evaluation stage.
  • Maintenance and support is far less than originally anticipated and less than maintaining a system in-house. Starting in FY22, support is estimated to be only about $2.2 million (see Budget below), which includes vendors, hosting, call center and infrastructure support for all jurisdictions across Colorado.

My Two Cents

This is a pivotal, transformational time for Colorado, and with COVID-19, we have all the more reason to simplify process for taxpayers. As a member of the legislative Sales and Use Tax Task Force, I’ve been privileged to have a voice in the efforts to streamline state tax policies and create a statewide sales tax system. Yes, sometimes governments are efficient.

These efforts are a great example of a public private partnership. The significant success of SUTS illustrates how state government, local jurisdictions, vendors, and the business community can come together to simplify sales tax. Several of the state’s largest cities and counties were actively involved in the process. Many people didn’t believe it could be done and look where we are.

Interested in learning more about the system? This report outlines the background that started the SUTS legislation and covers the controlled launch, budget, methodology, change management and future of the system. Also highlighted is the stakeholder engagement and governance that ensured the SUTS success as well as stakeholder feedback. 

We’ll continue to keep you posted on developments.

Click Here to View Full Report

SUTS System Update on Home Rule Municipalities 

Home Rules present additional challenges to taxpayers. Colorado has 70 Home Rule municipalities that self-collect sales and use tax. CDOR is tracking the progress of each one to sign-up and begin utilizing the benefits of the SUTS System. Here’s a scoresheet CDOR issued of where the process stands.

  • 47% of the Home Rules are reviewing and evaluating the system.
  • 30% of the Home Rules are actively considering the system and have started the process of getting signatures for the SUTS System Agreement.
  • 13% of the Home Rules have signed SUTS agreements and are on the SUTS System. 
  • 10%  of the Home Rules have not responded to requests for a demonstration or meeting.

Stay Up-to-Date with SUTS

Get in touch with a member of the SALTovation team to discuss your state and local tax concerns. 

Let’s Talk Tax

Judy Vorndran can be reached at jvorndran@taxops.com or 720.227.0093. 

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