Work at the Colorado legislative sales tax simplification task force soon to be evident to every business with a sales tax duty.
Exactly what’s been happening at the Sale and Use Tax Simplification task force will soon be seen by every business in the state of Colorado. Task force efforts to get a state remittance portal for online businesses to easily collect and remit the exact amount of tax to the state is expected to go live as early as June 2020.
There will still be kinks to work out but this will represent giant progress towards simplification. Colorado has 71 home rule cities, each with their own unique sales tax registration and filing requirements in addition to the state. That means Colorado is 72 times more difficult than single-rate states!
Colorado desperately needs to ease taxpayers frustrations with the current remittance systems. It is a trap for the unwary and leads to painful penalty and interest assessments.
There are vendors who are working with the cities to allow one place to file home rule sales tax returns (MuniRevs, but licensure is still at the home rule level). If a business were to register in all of the home rule cities plus the state, the annual cost could be over $1,000 per year.
This will certainly be good news for sellers dealing with destination sourcing, home rule requirements, and the roughly 700 taxing districts collected currently by the state. There was a brief delayed enforcement of the state’s new destination sourcing rules from the end of 2018, but Colorado is already collecting on behalf of all statutory (non-home rule) cities and counties effective June 1, 2019.
So much more is still to be done to simplify the web of state and local taxing issues in Colorado (see The fix is on: Simplifying Colorado sales tax enters active phase). With that in mind, the task force members put forth a bill asking the 2020 legislature to extend its sunset date by five years and expand its mission. This would give the task force more time to get critical work done on standard definitions, vendor fees, taxing boundaries, use taxes, and small business safe harbors.
Right solution for businesses
Judy Vorndran has been a member of the legislative sales tax simplification task force since its inception as well as a board member of the Simplify Colorado Sales Tax coalition. Steady movement on both fronts is expected to culminate in real change that relieves businesses, consumers and taxing authorities of administrative burden and cost, and potentially increase sales tax compliance across the state. Become a part of the solution by joining the Coalition to Simplify Colorado Sales Tax today. We’ll keep you posted on developments.
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Judy Vorndran can be reached at jvorndran@taxops.com.
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