Colorado?s system of state and local sales taxes (SALT) is complex, ambiguous, and confusing. The state’s decentralized sales tax system is one of the most complicated in the country. It’s overdue for an overhaul.
During 2018, various government, private sector, legislative and professional services experts came together to testify to the complexity of the current system and the need for simplification at the statehouse, with the result that sales tax reform is now taking shape.
Leading the charge are members of the Coalition to Simplify Colorado Sales Tax. Since its inception, I’ve been a board member of this Coalition, and in that time, we’ve had notable successes in advocating for new laws. The mission of the coalition is to reform Colorado’s complex SALT system and replace it with one that is fair, simple and predictable for businesses.
This Coalition of businesses, trade organizations, and other interested taxpayers is driving reform to achieve these goals. Ticking down the successes so far:
- Eliminate pay for play. In 2016 the coalition passed legislation, SB16-36 to reform the states’ unfair system that required a taxpayer to pay the full tax audit assessment or post a bond before seeking a ruling from an independent court. Now taxpayers can appeal to district court before any tax payment is due (but retain the option to bond if desired in order to stop further interest and penalties from accruing).
- Creation of a Task Force. Successful passage of legislation in 2017, HB17-1216, created the Legislative Sales and Use Tax Simplification Task Force which is authorized to meet for three years to examine ways to simplify the state’s complex sales and use tax system. I am an appointed member of this Task Force.
- DOR request for information (RFI). 2018 legislation, HB18-1022, requiring the Department of Revenue to issue a request for information (RFI) for an electronic sales & use tax simplification system that the state and local governments could choose to use that would simplify the administration of the state and local sales and use tax license and collection system. This legislation was enacted March 1, 2018.
- DOR request for proposal. Based on the responses to the RFI, the task force voted to draft a bill to move forward with seeking proposals for the development of an electronic sales and use tax simplification system.
As we now enter a more active phase of simplification, the task force is also charged with considering the implications of the recent U.S. Supreme Court decision in Wayfair. The Supremes decision makes things simpler by overruling the physical presence requirement laid out years ago in the Quill case; however, as noted during a recent task force meeting, states that have complicated sales tax systems, like Colorado, will still see uncertainty.
Right solution for businesses
The Coalition’s steady movement forward is expected to culminate in real change that relieves businesses, consumers and tax 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.
Join me in the Simplify Colorado Sales Tax coalition. Learn more.
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Let’s talk tax
Judy Vorndran can be reached at email@example.com or 720.227.0093. Follow Judy on LinkedIn.