COLORADO – Expanded Nexus Provisions Introduced

HB13-1312 Introduced 4/16/2013

A BILL FOR AN ACT CONCERNING THE CIRCUMSTANCES UNDER WHICH A PERSON WHO SELLS ITEMS SUBJECT TO SALES TAX MUST COLLECT SUCH SALES TAX ON BEHALF OF THE STATE.

The bill modifies and expands the state’s sales and use tax nexus provisions by:

• Expanding the types of activities that will create nexus with the state if conducted by any person that already has substantial nexus with this state, other than a common carrier acting in its capacity as such, pursuant to an agreement or arrangement with an out-of-state retailer;
• Clarifying that the expanded nexus provisions create a rebuttable presumption that the specified activities create substantial nexus for the out-of-state retailer;
• Requiring legislative approval of any agreement, executive order, or contract by the state that relieves an out-of-state retailer of its obligation to collect sales and use tax even if the retailer or an affiliated person has substantial nexus;
• Requiring an out-of-state retailer to collect and remit sales and use taxes if that retailer contracts with the state for the sale of tangible personal property or taxable services;
• Limiting the effect of the expanded nexus provisions to sales and use tax by specifying that the nexus does not apply to franchise, income, or other taxes; and
• For local sales or use taxes, requiring the attributed activity creating the nexus for the out-of-state retailer to occur in the boundaries of the local taxing jurisdiction

Can Colorado adopt and universally implement the Marketplace Fairness Act simplification? H.B.1312 is an attempt to move in that direction, but universal adoption is not likely. Colorado has numerous home-rule cities that enact and enforce their own set of sales and use tax laws. They often differ from the State and from each other.

This makes Colorado perhaps the most difficult state for businesses when it comes to handling sales and use tax issues. Obtaining collective agreement on simplification would be extremely difficult unless the voters in Colorado come to understand the difficulty and push for change. Click Here for links to the various Colorado home-rule cities’ sales tax websites.

CO HB13-1312 Intro Full text.

To learn more about how we can help with these or the following issues, please Contact us today:

• Assistance with proactive minimization of prior period sales/use tax liabilities
• Help with nexus questions and issues
• Other sales and use tax related questions

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